Playtech plc Annual Report and Financial Statements 2022
ww Our strategic roadmap
Our purpose
To create technology that changes the way
people experience gambling entertainment
Our strategy
B2B:
1
2
3
B2C:
4
Be the partner
of choice for
newly regulating
markets
Capitalise on
Live and SaaS
opportunities
Realign
resources to
reflect B2B
growth areas
Leverage retail
presence to
grow Snaitech’s
online business
Read more about our strategy on pages 12 to 15
5
6
Optimise
HAPPYBET for
online
Targeted M&A
to expand
Snaitech
Our critical success factors
Scale and
distribution
Data
Sustainable
Success
Innovation
Read more about our strengths on page 32
Sustainable Success pillars
Pioneering safer
gambling solutions
Promoting integrity and
an inclusive work culture
Powering action for positive
environmental impact
Partnering on shared
societal challenges
Read more about our sustainability strategy on page 46 to 77
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You will find the icon above throughout this report
to highlight Sustainable Success content
Playtech is the leading platform, content and
services provider in the online gambling industry,
with a clear strategy to benefit our shareholders,
customers, colleagues and the environment.
Founded in 1999, the Company has a premium
listing on the Main Market of the London Stock
Exchange and is focused on regulated and regulating
markets across its B2B and B2C businesses.
Both divisions leverage Playtech’s proprietary
technology to deliver innovative products
and services to ensure a safe, engaging and
entertaining betting and gaming experience.
Contents
Strategic Report
Financial highlights
2
3 Operational highlights
4 Company overview
6 Chairman’s statement
United with Ukraine
8
10 Our investment case
12 Our strategy
16 Key performance indicators
18 Chief Executive Officer’s review
24 Market trends
30 Business model
34 Product and innovation
43 Stakeholder engagement
46 Responsible business and sustainability
78 Chief Financial Officer’s review
85 Risk management, principal risks and
uncertainties
91 Viability statement
Governance Report
94 Chairman’s introduction to governance
96 Board of Directors
98 Directors’ governance report
106 Audit Committee report
Remuneration Report
111 Statement by the Committee Chairman
115 Summary of Directors’
Remuneration Policy
119 Annual report on remuneration
129 Directors’ report
Financial Statements
136 Independent auditor’s report
144 Consolidated statement of
comprehensive income
145 Consolidated statement of changes
in equity
146 Consolidated balance sheet
148 Consolidated statement of cash flows
150 Notes to the financial statements
216 Company statement of changes in
equity
217 Company balance sheet
218 Notes to the Company financial
statements
226 Five-year summary
Company information
227 Company information
View the Digital Summary Report at
www.ar22.playtech.com
Playtech plc Annual Report and Financial Statements 2022
1
Strategic Report Financial highlights
Strong financial
performance in 2022
Revenue1
€’m
2022
2021
2020
2019
2018
Diluted adjusted EPS1
c
2022
2021
2020
2019
2018
Revenue from regulated markets2
%
Adjusted EBITDA1
€’m
1,602
1,205
1,079
1,441
1,225
51.5
40.9
8.8
44.6
73.9
2022
2021
2020
2019
2018
Net debt to EBITDA4
x
2022
2021
2020
2019
2018
89
85
84
87
78
0.6
1.9
1.7
1.6
1.5
2022
2021
2020
2019
2018
Adjusted operating cash flow3
€’m
2022
2021
2020
2019
2018
406
317
254
375
345
397
318
276
303
342
Group revenue growth1
Group adjusted EBITDA1
33%
€406m
B2C adjusted EBITDA growth1
Net debt to EBITDA4
38%
0.6x
“ Encouraging progress
across both the B2B and
B2C divisions in 2022,
culminating in good
EBITDA growth and a
strong balance sheet.“
Chris McGinnis
Chief Financial Officer
1 From continuing operations.
2 B2B and B2C only.
3
Continuing operations but includes Finalto in FY20.
Adjusted for Snaitech’s PREU tax payment of €90
million relating to 2020, which was paid in 2021 due to
circumstances around COVID-19. Definition has changed
from FY21 to adjust for changes in jackpot balances,
client deposits and client equity, professional expenses
on acquisitions and ADM security deposit.
4
Net debt/Adjusted EBITDA is calculated as gross debt
less Adjusted gross cash including cash held for sale
and excluding cash held on behalf of clients, progressive
jackpots and security deposits divided by Adjusted
EBITDA from continuing and discontinued operations.
2
Playtech plc Annual Report and Financial Statements 2022
Strategic Report Operational highlights
Significant progress
across the Company
B2B – executing on our strategy
Extending lead
in LatAm
2022 saw a strong performance in the
LatAm region, illustrating the value of the
structured agreement model. Caliente in
Mexico performed strongly once again.
Wplay in Colombia also performed well, and
is poised to continue its growth. Galerabet
positions us well in the potentially lucrative
Brazilian market.
Key deals signed
in the US
Excellent progress was made in the US, with
several new deals signed in the year. Golden
Nugget, Rush Street and WynnBET have
signed multi-state deals, while Resorts and
888 have signed multi-product agreements
in New Jersey. Playtech expanded its
footprint with Parx, launching its IMS platform
in Pennsylvania.
Live performing
well
Live delivered a strong performance,
with Playtech taking full advantage of the
structural growth drivers in this product
vertical. Playtech opened a new Live facility
in Peru in 2022, and is now well positioned
to serve its existing clients in Latin America.
B2C – outperforming and transformed
Snaitech continues
to lead in Italy
Snai maintained its number one market
share position1 across Italian sports betting
brands in 2022, demonstrating its consistent
operational and brand strength, whilst also
being a fast growing player in Italy in the
online sector when measured by Gross
Gaming Revenue (GGR).
Snaitech transformed
post pandemic
Snaitech is fundamentally a superior
business post pandemic. With the online
segment making up a greater proportion of
revenues, Snaitech is a higher margin and
less capital intensive business.
Read more about Snaitech on page 15
A successful 2022
football World Cup
Wagers during the football World Cup in
Qatar were up 27% compared to Russia
in 2018 despite Italy’s absence from the
tournament, demonstrating the strength of
Snaitech’s brand and technology offering.
Building a better business
Ukraine –
supporting the
Playtech family
With over 700 employees in Ukraine, the war
had a big impact on the Playtech family, and
the Company responded with support for
our employees and their families as well as
contributing to humanitarian relief efforts.
Reducing our
environmental
footprint
Playtech has set a target to reduce
operational emissions by 40% by 2025.
We have made progress on meeting this
target, with 56% of Playtech’s total energy
consumption derived from renewable
energy sources, up from 11% in 2021.
Leading research
into responsible
gambling
Playtech is collaborating with Holland
Casino, the University of Amsterdam and
Erasmus University to initiate a new four-year
research project to examine how best to
tailor tools to customers’ individual needs,
risk levels and behaviour patterns.
Read more about our Ukraine response on
pages 8 and 9
Read more on pages 64 to 73
Read more on page 53
1 Retail and online combined, measured by GGR.
Playtech plc Annual Report and Financial Statements 2022
3
Strategic Report Company overview
The leading platform,
content and services
gambling technology
company
Supporting the Playtech
family in Ukraine
An unprecedented humanitarian
effort to help our >700 employees in
Ukraine, led by Playtech staff.
Read more on pages 8 and 9
20Countries
with offices
Country
c.7,000
Employees
>180
Licensees
>40Regulated jurisdictions
A global company
Core competencies
Playtech was established at the inception of
the online gambling industry and possesses
unparalleled knowledge and expertise in
the sector, with over 20 years of experience
and investment in technology. Playtech’s
global scale and distribution capabilities,
with over 180 licensees operating in over
40 regulated markets and with offices in
20 countries, mean we are ideally positioned
to capture opportunities in newly regulating
markets and high-growth markets with low
online penetration.
Scale and distribution
Sustainable Success
Playtech’s scale and distribution network
across more than 180 licensees in over 40
regulated jurisdictions in retail and online
allows it to power its leading suite of platform,
content and services.
Growing our business in a sustainable and
responsible way, and in line with our values,
is a key factor in delivering long-term value
for all of our stakeholders.
Read more on page 46 to 77
Data
Innovation
Playtech’s scale enhances its data-driven
analytics, allowing it to develop intelligent
platform features to improve customer
experience.
We invest heavily to deliver innovative ways
for end customers to experience content
and services, such as pioneering omni-
channel gaming.
Read more on page 34 to 42
4
Playtech plc Annual Report and Financial Statements 2022
Strategic Report Our operations
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.
Read more on page 30
B2C
Acting directly as an operator in select
markets and generating revenues from
online gambling, gaming machines and
retail betting.
Read more on page 31
€632m
Revenue
€160m
EBITDA
25%EBITDA margin
€983m
Revenue
€245m
EBITDA
25%EBITDA margin
An increasingly more
sustainable division
A fundamentally higher quality
division post pandemic
2017 73+
44+
Unregulated B2B revenues 12+
2019 26+
Snaitech % of online revenues
Regulated B2B revenues
2022
2022
Snaitech % of retail revenues
44%% of regulated B2B
revenues (2017)
73%% of regulated B2B
revenues (2022)
18%B2C EBITDA margin
(2019)
25%B2C EBITDA margin
(2022)
Playtech plc Annual Report and Financial Statements 2022
5
Strategic Report56
+
0
+
0
+
0
K
27
+
0
+
0
+
0
K
88
+
0
+
0
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0
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74
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0
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Chairman’s statement
Strategy execution
underpinned by strong
corporate governance
I am delighted to report another highly successful year
for Playtech, albeit one in which we had to contend with a
challenging economic backdrop and significant disruption
from the war in Ukraine.
Despite these circumstances, we delivered strong growth and made
significant progress against our strategy. This underlines both the
resilience of our business model as well as the ability, commitment
and dedication shown across all levels of the business.
I would like to thank my Board colleagues, the Executive Management
and the wider team, together with our advisers, who have worked
tirelessly to deliver these excellent financial, operational and strategic
results against a challenging backdrop. Their efforts have been the
foundation of our success this year.
Brian Mattingley
Chairman
6
Playtech plc Annual Report and Financial Statements 2022
Strong progress from all corners of the business
Playtech made significant progress throughout 2022 across
both the B2B and B2C businesses, further diversifying its
portfolio and positioning the Group to capitalise on the
exciting opportunities ahead:
•
In the US, Playtech expanded its footprint with Parx, launching its
IMS platform in Pennsylvania. In early 2023, Playtech also signed
a landmark agreement with Hard Rock Digital that accelerates our
US strategy and provides significant growth opportunities globally.
• Good progress was made in Canada, with Playtech signing an
agreement with NorthStar to launch a broad suite of products in
this newly regulated market, along with taking an equity investment
in NorthStar in early 2023, incorporating elements of the strategic
agreement model employed successfully in other markets.
•
In Latin America, Playtech’s presence continues to go from strength
to strength, with existing agreements in Mexico and Colombia
seeing excellent growth in the period. Playtech is ideally positioned
to benefit from growth in the soon to be regulated Brazil market.
Playtech opened a new Live Casino facility in Peru as it continues
to expand its presence across the region.
• Snaitech has continued to exceed expectations with the online
segment proving resilient despite the reopening of retail sites, while
it also maintained its number one position by brand across retail
and online sports betting in Italy. Fabio Schiavolin, CEO of Snaitech,
discussed the opportunity for the business at an investor event
hosted in September 2022.
More details can be found on pages 19 and 22 for B2B and B2C
businesses, respectively.
Corporate activity
The impressive performance delivered in 2022 is all the more notable
given the intensity of the corporate activity that Playtech has been
involved in. Taken together, this activity shone a spotlight on the
quality of Playtech’s strategy, operations, technology and people,
whose commitment and expertise continue to drive Playtech from
strength to strength.
Offer and further approach for Playtech
In October 2021, the Board recommended an all-cash offer from
Aristocrat at a 58% premium to the prevailing share price. Ultimately,
at the Court and General Meetings held on 2 February 2022,
Aristocrat’s proposal did not achieve the requisite 75% level of
shareholder approval needed for its offer to progress.
Shortly after Aristocrat’s proposal lapsed, Playtech received an approach
by an investor group formed and advised by TTB Partners Limited. On
14 July 2022, TTB Partners advised that it did not intend to make an
offer for the Company due to challenging underlying market conditions.
Strategic Report
Finalto sale completed
We were delighted to complete the sale of Finalto in July 2022.
This represented a significant step in our stated strategy to simplify
the Group and focus our efforts on the high-growth B2B and B2C
gambling markets.
Board changes
As our Company evolves, so too does its Board. After five years as Chief
Financial Officer (CFO), Andrew Smith stepped down from the Board
in November 2022. Andrew contributed significantly to Playtech’s
strategy and helped guide the business through a period of substantial
transformation. We wish him all the best in his future endeavours.
It’s a testament to the succession planning work of the Nominations
Committee and the Board that we’ve had such a seamless transition
with Chris McGinnis becoming our new CFO. Chris has done a superb
job as Deputy CFO and Director of Investor Relations, and I believe that
his deep knowledge of Playtech will be invaluable in the years ahead.
Since the start of the new year, we have also welcomed Samy Reeb
to the Board as a Non-executive Director. We are already reaping the
benefits of his broad skillset and extensive experience of working with
global businesses.
One of my highest priorities when joining Playtech was to address the
balance of the Board. While we have made good progress towards
improving the Board’s gender diversity, there is still work to be done
and we are actively focused on taking further steps towards meeting
our ambition of having a more diverse Board.
Sustainability
Following an intense period of corporate activity last year, we enter
2023 with a renewed focus on issues around the environment,
sustainability, and our wider contribution to communities and
society. Our Sustainable Success strategy is central to this and sets
out an ambitious plan for how we intend to bring the principles of
sustainability and responsible business into everything we do.
Despite the competing priorities of a busy year, our newly formed
Sustainability and Public Policy Board Committee met regularly to
review, monitor and advise on Playtech’s sustainability, responsible
business and public policy matters. The Committee also ensures the
continued effectiveness of Playtech’s ESG strategy, ensuring that
we remain truly forward looking and progressive in our plans.
Ukraine/people
The backdrop of the war in Ukraine has put a significant strain on our
people and on the communities in which we operate. While we took quick
and decisive action to minimise disruption to our business, we are mindful
that our colleagues and their families who remain in Ukraine continue to
face very real and dangerous challenges every day as the war continues.
I’m proud of the response from our people who have maintained contact
with those colleagues in Ukraine, assisted with relocation efforts and
provided emergency supplies. We remain committed to doing everything
we can to ensure their safety during these difficult times.
Our people are our greatest asset and I want to thank everyone for
their hard work in helping us to navigate the challenges of the past
year and deliver such a strong set of results.
Looking forward
Whilst we anticipate many of the challenges faced last year to continue
into 2023, I am confident that Playtech’s clear and proven strategy across
both the B2B and B2C divisions positions us well to build on our progress
and deliver another outstanding performance in the year ahead.
Brian Mattingley
Chairman
23 March 2023
Remembering Alan Jackson
It is with great sadness that we lost a dear friend and a
member of the Playtech family – Alan Jackson. Alan was
appointed to Playtech’s Board as a Non-executive Director
during Playtech’s IPO in 2006 and became Chairman in
October 2013, serving a total of 14 years on the Playtech
Board. Alan built an extraordinary and distinguished career
in business and Playtech was fortunate to have benefited
from his leadership, dedication, support, kindness and
enthusiasm. We are grateful for Alan’s contributions, which
were instrumental in making Playtech the company it is today.
We will all miss Alan dearly – may he rest in peace.
“ I am delighted to report another
highly successful year for Playtech
where we delivered strong growth
and made significant progress
against our strategy despite
a challenging economic and
geopolitical backdrop.”
Playtech plc Annual Report and Financial Statements 2022
7
Strategic Report United with Ukraine
Supporting the
Playtech family
in Ukraine
With over 700 team members in Ukraine – over 10% of
our workforce – the war in Ukraine continues to have a
major impact on Playtech. However, an unprecedented
situation also drove a unique response, a response of
which everyone at Playtech can be proud, and which put
the safety and wellbeing of our colleagues ahead of all else.
On 24 February, teams from Playtech’s Kyiv office were
planning an annual winter trip for 250 colleagues. Hours
later, a completely new plan was underway – one which
involved establishing a crisis team, based in our office
in Sofia, Bulgaria, and a process to ensure the safety
of our staff.
By the evening of 25 February, more than 150 of our
colleagues had volunteered to join what would become
a c.300-strong team. Immediate action included the
establishment of a 24/7 hotline chat group to maintain
contact with every team member based in Ukraine. By
28 February, Playtech had delivered essential supplies
including food, water and eight tonnes of medical
equipment. The most ambitious part of the plan involved
Playtech organising and financing large-scale bus
transportation to help approximately 250 colleagues
and family members leave Ukraine, the majority of
whom were relocated to Sofia.
As the war continues, we’re monitoring current
developments and supporting our employees, ensuring
their safety where possible, providing additional financial
support and offering a range of equipment such as new
laptops with long life batteries and access to satellite
phones, to support them during the current and potential
future energy blackouts.
“ We express our gratitude for your
significant contribution and assistance
in collecting donations and organising
medical humanitarian assistance
to Ukraine.”
Alyona Novgorodskay
VP Business Development at the
Embassy of Ukraine in the State of Israel
8
Playtech plc Annual Report and Financial Statements 2022
Scale of the
undertaking
>700
Employees in Ukraine
c.300
Employees volunteered
to contact their colleagues
to ensure their safety
>250
Playtech employees and
their families relocated
An incredible
achievement
>€350k
Donations to support the
humanitarian effort in Ukraine
>8 tonnes
Life-saving medical
equipment delivered
8 Charities donated to facilitating
humanitarian support
Strategic Report
A monumental effort
Built a brand new organisational structure
to deliver:
• medical equipment and mental
health support;
• 24/7 hotline providing employees with
access to our dedicated control centre;
• transportation within and outside Ukraine;
• alternative payment methods while
parts of the banking system were
shut down; and
• food, water and basic supplies within
and outside Ukraine.
Behind the numbers and logistics, the story of
Playtech’s response to the Ukrainian war is ultimately
a human one. Every one of the 714 employees based
in Kyiv has been affected in their own way and has
faced individual challenges.
In March, one of our colleagues contacted us in
dire need of help for her family who, displaced by
the invasion, were living in a hotel in Poland. With
no access to food or money, they ate only thanks
to the hotel breakfast for several days. Our team
acted quickly to organise a money transfer to the
hotel, paying for several months’ worth of food and
accommodation in advance. Everyone in the crisis
team was proud that our colleague felt comfortable
in turning to us for help at this most difficult time. As
a result, her 85-year-old grandfather (pictured) was
able to enjoy a hot dinner for the first time in days.
“ The strength and character shown by
everyone in Ukraine was truly humbling
and inspiring. We were fortunate enough to
provide essential supplies to those in need,
and our aim remains to continue to support
our people and assist them in confronting
the challenges they are facing in whatever
way we can.”
Mor Weizer
CEO of Playtech
Playtech plc Annual Report and Financial Statements 2022
9
Strategic Report Our investment case
Structural growth drivers
with margin expansion
With an increasingly diversified global offering, Playtech is
primed to accelerate organic sales growth across both the
B2B and B2C divisions.
Global regulated gambling markets, led by the Americas and
Europe, are expected to grow materially. Playtech is well
positioned to participate given its broad, high-quality product
offering, while structured agreements and SaaS allow Playtech to
serve almost any operator across the globe. In our B2B business,
high operating leverage within the attractive Live and SaaS
segments should provide a further tailwind to margins.
Snaitech, our B2C business in Italy, has become a fundamentally
higher quality business post pandemic due to the structural shift
towards the underpenetrated, higher margin online business
and this is expected to continue to deliver strong growth.
Playtech has the potential to deliver a powerful combination of
top-line growth and margin expansion, which is expected to drive
earnings momentum and high cash flow generation for the Group.
As a result, further investments can be made to position ourselves
advantageously in other newly regulating markets as well as
delivering shareholder returns.
1
Attractive structural growth drivers in B2B Gambling
The gambling market is in the midst of a super-cycle (see page 24),
driven by the expansion of regulated and regulating markets, with
the Americas and Europe leading the way.
At the same time, rapidly shifting consumer and technology
trends have grown the appeal of the Live segment.
Playtech is well placed to capture this considerable opportunity.
Through its investments in innovation, Playtech possesses a
strong technology offering and its sheer scale means it has
access to vast amounts of data, allowing it to generate data
network effects (see page 28), while the variety of its business
model offering from structured agreements to SaaS allows it
to serve almost any operator.
Region
• Americas
• Europe
See pages 24 to 27
Technology
•
Innovation
• Data network effects
See pages 34 to 42
Multiple
organic
growth
drivers...
...and the
means to
capture
value
Product
• Live Casino
See page 29
Business model
• Structured agreements
• SaaS
See pages 30 and 31
10
Playtech plc Annual Report and Financial Statements 2022
Strategic Report 2
3
Potential for margin
expansion is significant
High operating leverage in Live
and SaaS…
Within the Live Casino business, Playtech has already made
significant investments in studio infrastructure. Within SaaS,
Playtech has also invested heavily in data centres to be able
to serve its customer base, while it has already signed up
over 350 customers with scope to increase wallet share.
Investment to date lays the groundwork for higher operating
leverage going forward.
Underpenetrated online
segment set to drive B2C
growth
Underpenetrated Italian
online market
Italy is one of the top two gambling markets in Europe,
along with the UK. Unlike the UK, the online market is still
underpenetrated at 26% versus 58% in the UK and thus we
see scope for the addressable market to grow in Italy. With
average revenue per online customer acquired from retail
sites more than three times higher than those acquired
directly through online channels. Snaitech’s strong brand,
retail presence and cross-selling approach means it is
ideally positioned to benefit from this growth opportunity.
26%Italy online
penetration1
58%UK online
penetration1
1
Source: H2GC (includes betting and gaming and excludes lotteries).
Further upside from
European expansion
Outside of Italy, there is the potential to acquire
retail-focused assets in neighbouring European countries
with low online penetration at attractive multiples, with a
view to growing the online business given the track record
of existing Snaitech management.
…coupled with the shift to the
B2C online channel…
The Snaitech online business has a significantly higher
margin than retail. As Snaitech looks to continue to migrate
retail customers to online in addition to acquiring native
online customers, we should continue to see the share of
the online segment increase.
…to drive margin expansion
across the Group
With both the B2B and B2C segments exposed to margin
accretive factors, we expect Playtech to be able to deliver
margin expansion in the years ahead. This, combined with
accelerating top-line growth, will deliver earnings growth
for Playtech’s shareholders.
Playtech plc Annual Report and Financial Statements 2022
11
Strategic Report Our strategy
Delivering consistent growth
in a sustainable way
Playtech has a clear plan to continue to drive growth in a responsible and
sustainable way. Here we outline the medium-term strategic priorities for both
the B2B and B2C divisions, which will enable us to deliver revenue growth,
expand margins and generate shareholder and stakeholder value.
B2B: well positioned in markets set for growth
1
Be the partner
of choice for
newly regulating
markets
Growth in the gambling industry is primarily
driven by regulation – growth comes from
markets that are early in the journey of
regulating, which then moderates as markets
progressively mature. We aim to be the
partner of choice for operators in newly
regulating markets, with a particular focus
on the Americas and Europe.
The US represents a huge revenue
opportunity of $3 billion for Playtech on a per
annum basis across iGaming, online sports
and platform (see page 25).
The LatAm region has strong structural
drivers (see page 26). With Caliente providing
the blueprint for success in this region,
Playtech is ideally positioned to deliver
strong growth via its structured agreements
in multiple countries, including Brazil.
Finally, there continues to be strong potential
in European markets that are either regulating
or underpenetrated online where Playtech
can bring the strength of its offerings to bear
such as the Netherlands and Spain.
2
Capitalise on
Live and SaaS
opportunities
3
Realign resources
to reflect B2B
growth areas
Live represents an enormous opportunity
(see page 29), in which Playtech has invested
heavily. Ten studios are currently operational
with a further one in Pennsylvania under
construction. We have more than doubled
the number of tables over the past four years
and invested in both the latest cutting-edge
technology and branded gaming rights
such as Jumanji™. With significant operating
leverage in the business, growth in Live is
margin accretive.
With exciting areas of growth in regulated
markets and several technology trends (see
technology trends on page 28) maturing at
the same time, there is a need to continue to
invest in the B2B Gambling division to ensure
Playtech maintains and grows its market
share lead. We see opportunities across
the B2B business where we can improve
efficiencies and eliminate duplication, the
savings of which can be used to fund any
required investments.
Link to KPIs
1
2
3
4
5
6
7
Link to risks
1
2
3
4
5
6
7
The SaaS business model (see page 31)
allows Playtech to serve those operators
looking for Playtech’s content without the
platform, thus increasing the Company’s
total addressable market. With investments
already made in building out infrastructure,
such as data centres, SaaS is a high-margin
segment. Although SaaS revenues have
been growing strongly, revenue from each
operator represents a small proportion
of their wallet. Thus, we see ample scope
to increase wallet share amongst these
existing customers.
Link to KPIs
Link to KPIs
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Link to risks
Link to risks
1
2
3
4
5
6
7
1
2
3
4
5
6
7
12 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Strategy in action
Case studies of executing in newly regulated markets
Holland Casino: very strong start
During 2021, Playtech signed a new, expanded long-term strategic
software and services agreement with Holland Casino, the
state-owned land-based casino operator in the Netherlands – a
top ten market in Europe that opened its regulated online gambling
market in October 2021. Playtech now supplies Holland Casino
with a full turnkey, multi-channel technology package, as well as
certain ancillary services.
Holland Casino is off to an impressive start given its first mover
advantage and was the biggest driver of revenue growth in Europe
in 2022, illustrating the significant growth opportunities of newly
regulated markets. Combined with the launch of Casino and Poker
with Bet365 in the Netherlands in early 2022, Playtech is well
positioned to capitalise on the Netherlands market.
“ Alongside Playtech’s unrivalled
multi-channel technology, its strong
track record in delivering industry-
leading software to newly regulated
markets makes it a trusted and
experienced supplier.”
Erwin van Lambaart
CEO, Holland Casino
Caliente: successful blueprint
Caliente in Mexico provides the blueprint for executing on structured
agreements (see business model section on page 30) in other markets.
The idea is to select a “local hero” in a country with favourable market
dynamics, and look to grow with that partner as the market grows. Playtech
contributes its market-leading technology as well as expertise and
experience in launching online businesses in newly regulating markets,
while the partner typically has a strong brand and deep knowledge of
local markets. The results, with aligned incentives, can be impressive.
Revenues within Mexico, the majority of which originate from
Caliente, have grown at a CAGR of 66% between 2015 and
2022 and Caliente now represents our largest customer when
measured by revenue. The attractive economics of a structured
agreement, which typically includes a higher revenue share for
Playtech, means that the profit margins are high.
With structured agreements signed in several other LatAm
countries including Colombia with Wplay and Brazil with Galerabet,
Playtech is in a strong position to build upon the Mexican success
story across the LatAm region.
Mexico revenues
$m (FY15–FY22)
2022
2021
2020
2019
2018
2017
2016
2015
66%CAGR
Playtech plc Annual Report and Financial Statements 2022
13
Strategic Report Our strategy continued
B2C: build a pan-European B2C presence
5
Optimise
HAPPYBET
for online
6
Targeted
M&A to expand
Snaitech
HAPPYBET now sits under the management
of the Snaitech team which has initiated a
process to optimise HAPPYBET’s online
business. This involves rationalising its retail
footprint with significant investment in the
online business, mirroring the successful
Snaitech strategy.
With Germany moving towards legalising
gambling, HAPPYBET is in a strong
position, having been awarded one of the
few available online sports betting licences
in Germany.
Link to KPIs
1
2
3
4
5
6
7
Link to risks
1
2
3
4
5
6
7
The Snaitech management team
transitioned the business to take advantage
of the shift to online. With this high-quality
management team in place, there is scope
to utilise this skill set and experience outside
of Italy, within neighbouring European
countries. Consolidation of HAPPYBET’s
position in Germany and Austria through
M&A looks attractive, while acquiring assets
in other neighbouring European countries
provides further opportunity.
Link to KPIs
1
2
3
4
5
6
7
Link to risks
1
2
3
4
5
6
7
4
Leverage retail
presence to
grow Snaitech’s
online business
Italy is one of the top two gambling markets in
Europe, along with the UK. Unlike the UK, the
online market in Italy is still underpenetrated
– 26% currently versus 58% in the UK. As a
result, we see significant scope for the higher
margin online business to grow.
Snaitech’s strong retail brand is critical to
its success and a competitive advantage
compared to online operators, particularly
in light of the advertising ban in Italy. With
average revenue per online customer
acquired via retail sites more than three times
higher than those acquired directly through
online channels, Snaitech’s cross-selling
approach means it is ideally positioned to
benefit from this growth opportunity.
Link to KPIs
1
2
3
4
5
6
7
Link to risks
1
2
3
4
5
6
7
See risk section on pages 85 to 90
See KPI section on pages 16 and 17
Embedding sustainability
into our culture
In 2021, Snaitech became a member of two leading Italian
associations for DEI: Parks – Liberi e Uguali and Valore D.
Parks – Liberi e Uguali works with companies to understand
and realise the full business potential of developing strategies
and best practices that respect diversity and inclusion.
Valore D is the first association of companies in Italy that has
been committed to gender balance and an inclusive culture in
organisations in Italy for more than ten years.
In 2022, Snaitech continued its collaboration with the two
associations to raise awareness of inclusion in the workplace
and generate a corporate culture that is better able to channel,
orient and welcome all diversity.
The goal of the campaign, “La consapevolezza prende forma”,
was to further grow and strengthen our commitment in this
direction. Snaitech held training sessions on diversity and
inclusion issues, which included three webinars in 2022.
14 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Strategy in action
The transformation of Snaitech:
a fundamentally higher quality business post pandemic
Larger addressable
market
Since Playtech acquired Snaitech in 2018,
it has transformed into a higher margin,
less capital intensive business with a larger
addressable market.
Snaitech’s efforts to leverage its leading
retail network and brand have created a
larger online business. As the pandemic
accelerated the shift to online, Snaitech
capitalised on the opportunity by launching
dedicated promotions to migrate customers
to online from retail.
With online revenues in 2022 remaining
stable despite retail having reopened, it’s
evident that some of these onboarded
customers continue to spend at least part of
their wallet online. New customers were also
onboarded directly via the online channel,
further increasing the addressable market.
Snaitech revenues by channel
€’m
2022
2021
2020
2019
666
234
355
364
230
158
729
100
Retail
Online
Higher margin
The pandemic accelerated the shift to
the online segment.
Snaitech revenue mix
(retail v online)
%
2022
2019
74
88
26
12
Retail
Online
Given the lower overheads and greater share
of Net Gaming Revenue (NGR), the online
segment is a higher margin business. This
has resulted in Snaitech becoming a higher
margin business overall.
Less capital intensive
The retail business requires more capital
expenditure to grow, given the licence
renewal fee is higher for retail compared
to online, in addition to Snaitech owning
a proportion of the gaming machines. As
a result, online is a less capital intensive
segment and thus benefits from a higher
return on assets.
Snaitech 2018–2022 average
capex to sales ratio
%
Retail
Online
2
6
Note: HQ Snaitech capex apportioned between
retail and online by revenues.
2022 Snaitech EBITDA margin
%
18
Retail
Online
56
Snaitech EBITDA margin
%
2022
2019
28
20
Playtech plc Annual Report and Financial Statements 2022
15
Strategic Report Key performance indicators
Financial
Group revenue growth1
33%%
2020
2022
2021
2019
2018
Adjusted EBITDA margin1
25%%
33
12
(25)
18
52
2022
2021
2020
2019
2018
25
26
24
26
28
Definition
Increase in revenue from continuing operations divided by
prior year revenue.
Why are we focused on it?
Revenue is a key driver of the business and is reported in detail
across geography and business unit. The measure enables us
to track our overall success and our progress in increasing our
market share.
Definition
Adjusted EBITDA shown as a percentage of revenue from
continuing operations. We use adjusted EBITDA to aid comparison
year to year.
Why are we focused on it?
Adjusted EBITDA margin is a measure of improving profitability in
our business and helps to evaluate the leveraging of our operating
assets. It also determines the quality of revenue growth.
2022 performance
Group revenues grew 33% in 2022 driven by continued strength
in regulated B2B markets and Snaitech.
2022 performance
Adjusted EBITDA margin declined 90bps in 2022 due to the
reopening of sites in the lower margin retail segment in Snaitech.
Link to strategy
4
3
2
1
5
6
Link to strategy
4
3
2
1
5
6
Diluted adjusted EPS1
51.5c
c
Adjusted operating cash flow1,2
€397m
€’m
2022
2021
2020
2019
2018
51.5
40.9
8.8
44.6
73.9
2022
2021
2020
2019
2018
397
318
276
303
342
Definition
Profit before exceptional items attributable to equity shareholders
of the Group from continuing operations, divided by the weighted
average number of ordinary shares outstanding after adjustment
for the effects of all dilutive potential ordinary shares.
Why are we focused on it?
Earnings per share reflects the profitability of the business and how
effectively we finance our balance sheet. It is a key measure for
our shareholders.
2022 performance
The increase is mainly driven by revenue and EBITDA growth in
2022 versus 2021, flowing through to earnings per share. The
adjusted measure is used to ensure comparability between years.
Definition
Operating cash flow after adjusting for changes in jackpot balances,
client deposits and client equity, professional expenses on
acquisitions and ADM security deposit.
Why are we focused on it?
Delivery of increased cash generated from operations allows us
to invest in further growth opportunities across our business as
well as delivering shareholder returns.
2022 performance
The increase is mainly driven by growth in earnings in 2022
versus 2021.
Link to strategy
4
3
2
1
5
6
Link to strategy
4
3
2
1
5
6
1 From continuing operations.
2
Includes Finalto up to and including FY20. Adjusted for Snaitech’s PREU tax payment of
€90 million relating to 2020, which was paid in 2021 due to circumstances around COVID-19.
16 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Non-financial
Powering licensees
with safer gambling
solutions
13 brands
Integrated with
BetBuddy
13
2022
6
3
2
2
2021
2020
2019
2018
8
7
7
2
2
Brands
Jurisdictions
Definition
Number of brands in jurisdictions that
were integrated throughout each year
with Playtech Protect solution, BetBuddy.
Why are we focused on it?
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.
2022 performance
BetBuddy has expanded into three
new jurisdictions, having been adopted
by clients in Germany, Portugal and
Switzerland. To cope with the growth of
its customer base, the platform has been
migrated to cloud architecture.
Link to Sustainability Success pillars
Pioneering safer gambling solutions
Gender diversity
at senior leadership
level
26%/74%
Female/male ratio
%
2022
2021
26
23
Female
Male
74
77
Definition
Percentage of male and female
employees in senior leadership positions.
Why are we focused on it?
Playtech aims to foster a respectful and
supportive workplace that enables every
colleague to have the same opportunity
regardless of regardless of background,
gender, ethnicity, cultures, beliefs and
other attributes that represent our
customers and community. The Company
has set out a specific diversity target to
increase the representation of people
who identify as female amongst its
leadership population by 35% by 2025
against the 2021 baseline year, with an
ultimate ambition to achieve equality in
the workplace.
2022 performance
Playtech conducted a systematic review
to strengthen our measurement and
reporting methodologies and processes.
This data has been instrumental
in implementing a programme of
improvements as we enhance diversity
as part of recruitment and selection,
development and succession planning,
with a particular focus on leader and
manager recruitment processes.
Link to Sustainability Success pillars
Promoting integrity and an
inclusive culture
Scope 1 and 2
greenhouse gas (GHG)
emissions
39.6%
Reduction since
baseline year, 2018
2022
6,970
2021
2020
2019
2018
7,892
9,316
10,914
11,543
Definition
Amount of carbon dioxide equivalent
(CO2e) emitted through the energy used
within all our assets, including office
buildings, racetracks, live studios and data
centres. More details on the methodology
can be found in the Responsible Business
and Sustainability Addendum to the
Annual Report 2022.
Why are we focused on it?
The environment, and particularly climate
change, is a growing area of concern
for Playtech, its investors and its other
stakeholders. In 2019 Playtech introduced
a GHG emissions target to guide its
energy reduction efforts. The Company’s
ambition is to reduce its absolute Scope
1 and 2 GHG emissions (location based)
by 40% by 2025, using 2018 as the
baseline year.
2022 performance
Playtech’s total Scope 1 and 2 (location-
based) emissions decreased by 11.7% in
2022. Since 2018, they have decreased by
39.6%, meaning that Playtech is very close
to achieving its 40% reduction target. One
of the major areas of focus was to switch
our material operations to renewable
energy, where possible, with 56.4% of
Playtech’s total energy consumption
derived from renewable energy sources,
up from 10.8% in 2021. Another notable
area of progress is the Company’s formal
commitment to set near-term and net
zero targets through the Science Based
Targets initiative (SBTi).
Link to Sustainability Success pillars
Powering action for positive
environmental impact
Playtech plc Annual Report and Financial Statements 2022
17
Strategic Report Chief Executive Officer’s review
Strong momentum
positions us well to deliver
on 2023 strategic priorities
Overview
Playtech made excellent progress on its strategic priorities
throughout 2022, with growth in both the B2B and B2C businesses.
As a result, the Group enters 2023 well-positioned to execute on
compelling market opportunities across both B2B and B2C.
Playtech’s B2B Gambling business remains focused on opportunities
in regulated or soon to be regulated markets. The Group continues
to target high-growth markets including the US, Latin America
and certain parts of Europe. In addition to growing in the attractive
Live market, Playtech continues to expand its portfolio of strategic
agreements. These helped the B2B segment to deliver revenue
growth of 14% (+11% on a constant currency basis) in 2022. At the
profit level, B2B Adjusted EBITDA grew a healthy 15% to €160.2 million
in 2022 compared to €139.2 million in 2021.
In the US and Canada, Playtech made great strides to establish itself
as one of the key players in this market. The long-term opportunity
across Playtech’s full product suite remains significant. In early
2023, a landmark agreement was signed with Hard Rock Digital to
provide Casino and Live, amongst other content, in North America,
accelerating our US strategy. In addition, having signed with Parx
Casino in 2021 in the US, Playtech grew its footprint with Parx by
launching its IMS platform in Pennsylvania and entered Ohio and
Maryland in 2023.
Playtech also signed several new deals in the period, including Golden
Nugget (Casino and Live in New Jersey and Michigan), and WynnBET
(multi-state deal to launch Live and Casino), while 888 and Resorts
Digital Gaming both signed up for Casino and Live in New Jersey.
Good progress was also made in Canada where Ontario became
the first province in Canada to regulate online gambling. This has
continued into 2023 with Playtech announcing in February that it has
taken an equity investment in NorthStar and extended the scope of
its relationship.
Playtech’s presence in Latin America continues to go from strength to
strength as existing agreements with Caliente in Mexico and Wplay in
Colombia continue to perform well. Playtech also opened a new Live
Casino facility in Peru as it continues to extend its presence across the
region. Looking ahead, the Company is looking forward to growing its
presence in the exciting, soon to be regulated Brazil market.
Playtech remains committed to diversifying its B2B division by
bringing on new brands and licensees. As well as making progress
with new strategic agreements and joint ventures, Playtech also
maintained its track record of attracting new brands to its SaaS
offering. Playtech launched over 100 brands in the period, with more
than 350 new brands now live since launching the SaaS offering
back in 2019.
Mor Weizer
Chief Executive Officer
18 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Playtech’s B2C Gambling business, Snaitech, recorded another
remarkable performance as revenue grew 54% compared to 2022.
Adjusted EBITDA, meanwhile, was 39% higher than the previous
year, benefiting from retail sites in Italy remaining open throughout the
year as well as the strength of online. The online segment continues
to see impressive growth, indicating that the addressable market has
expanded post-pandemic. Snai maintained its number one market
share position (retail and online combined measured by GGR) across
Italian sports betting brands in 2022, cementing its reputation for
consistent operational and brand strength, whilst also being a fast-
growing player in Italy in the online sector when measured by GGR.
The sale of Finalto was completed in July 2022 for cash proceeds
of $228.1 million resulting in a profit on disposal of €15.1 million
and represents a significant step forward in the Group’s strategy
to simplify the Group, allowing it to focus on the high-growth B2B
gambling and B2C gambling markets.
Playtech’s strong performance in 2022 was underpinned by
the energy, enthusiasm and professionalism of the Company’s
employees. They are the lifeblood of the business and do an
outstanding job supporting the Group’s customers.
Supporting the Playtech family in Ukraine
It has been more than a year since Russia’s invasion of Ukraine
and unfortunately the conflict continues to have a devastating
impact. While the Group’s continuity plans mean that Playtech
has experienced minimal disruption to its business activities, the
c.700 employees based in Ukraine remain front of mind. Playtech
is committed to doing everything it can to ensure the safety of them
and their families.
The Board and management team continue to be moved by
the generosity and support that the Group’s colleagues have
demonstrated in maintaining contact with those who remain in
Ukraine. Despite the other pressures facing the business last year –
including significant corporate activity – they have constantly sought
to do whatever they can to provide assistance in the form of ongoing
communications, logistics and financial support.
B2B Gambling
Core B2B Gambling
Regulated markets
Playtech’s B2B Gambling business remains focused on opportunities
in regulated or soon to be regulated markets. The Group continues
to target high-growth markets, including the US, Latin America and
certain parts of Europe.
Regulated markets delivered revenue growth of 22% (+18% on
constant currency basis) compared to FY 2021, driven by strong
revenue growth from the Group’s partners in Latin America, Holland
Casino in the Netherlands, as well as strong growth in other regulated
markets such as Poland, Spain and Ireland.
The Americas
The Americas is at the centre of our strategy for Core B2B Gambling.
The region maintained its impressive record of growth, with FY
2022 revenue up 43% (+27% at constant currency) compared to
FY 2021. This was powered by strong growth from Caliente as well
as increasing contributions from other customers, including Parx
in the US.
Accelerating the Group’s presence in the US remains a key strategic
priority for Playtech, as proven by the strides taken last year to
capitalise on the favourable regulatory environment. Having signed
a strategic agreement with Parx Casino in 2021, Playtech has been
increasing its footprint with Parx and this is starting to translate into
greater revenue contribution. In 2022, Parx launched its IMS platform
in Pennsylvania, which involved a complex migration, and will serve
as a useful blueprint for future deals. In addition, Playtech launched its
IMS, Casino and POP products in New Jersey, while in 2023, the IMS
was rolled out in Ohio and Maryland. Playtech now has a presence
with Parx in Michigan, Pennsylvania, New Jersey, Ohio and Maryland.
Further product launches in additional states with Parx are expected
going forward. Pokerstars also launched the Casino product in New
Jersey, while 888 launched Live Casino in Michigan in 2023.
Several new deals were also signed in the US, including Golden
Nugget (Casino and Live in New Jersey and Michigan), Rush Street
Interactive (multi-state deal for Casino), and WynnBET (multi-state
deal to launch Casino and Live), while 888 and Resorts Digital Gaming
both signed up for Casino and Live in New Jersey.
In March 2023, Playtech signed a landmark agreement with Hard
Rock Digital, the exclusive, global vehicle for online for Hard Rock
International, to provide Casino and Live amongst other content, in
North America. These products will also be supplied outside of North
America in addition to the IMS and services including marketing and
operations. As part of the agreement, Playtech has also invested
€80 million in exchange for a low single digit % minority equity
ownership stake, the proceeds of which will be used to help fund
Hard Rock Digital’s continued global expansion.
“ Playtech’s strong performance
in 2022 was underpinned
by the energy, enthusiasm
and professionalism of the
Company’s employees.”
Playtech plc Annual Report and Financial Statements 2022
19
Strategic Report Chief Executive Officer’s review continued
B2B Gambling continued
Core B2B Gambling continued
Regulated markets continued
The Americas continued
Meanwhile, Playtech delivered several significant product launches
across core markets. In the newly regulated Canadian province of
Ontario, NorthStar launched multiple products. In addition, Bet365
and 888 both went live in Ontario with Casino and Live on the first day
the market became regulated. Towards the end of 2022, FanDuel,
Mansion and Casumo all launched the Casino and Live products.
In February 2023, Playtech announced an expansion of its
partnership with NorthStar. Playtech has taken an equity investment
in NorthStar. The proceeds of this investment will be used to
accelerate the growth of NorthStar’s footprint across Ontario and
future regulated markets across Canada. The agreement also
expands the scope of Playtech’s offering to NorthStar to include
operational and marketing services, in addition to the IMS platform,
Casino, Live, Poker and Bingo solutions already launched.
Playtech delivered against its commitment to further expand its
infrastructure in high-growth markets, such as the US. Having
already opened Live studios in New Jersey and Michigan, another
Live facility is under construction in Pennsylvania and is expected to
open in 2023. Behind the Company’s growing physical presence are
an increasing number of employees focused on sales, operations
and back-office functions, taking head count to more than 130 at
the end of 2022.
Following the repeal of PASPA in 2018, each year that passes has
seen a growing number of states approve legislation to legalise
sports betting. While 2022 saw further progress, California was
notable in voting to reject the legalisation of online sports betting and
in-person sports betting at tribal casinos and private horse tracks.
20 Playtech plc Annual Report and Financial Statements 2022
This may delay legislation in states that have yet to approve sports
betting, but the expectation remains that these states will eventually
look to approve legislation. In 2022, Playtech received licences
for Pennsylvania, Colorado and Ohio with Maryland received in
2023, taking the total number of US states where Playtech has a
licence to nine.
Online casino is allowed at the discretion of individual states. No new
states have authorised Online casino in 2022, although there are
several states where iGaming legislation is being considered.
Playtech’s presence in Latin America continues to go from strength
to strength, with existing agreements with Caliente in Mexico and
Wplay in Colombia continuing to perform well. Looking further ahead,
Playtech is well-positioned to continue its growth and capitalise on
other strategic agreements in Latin America in the years ahead.
Playtech also opened a new Live Casino facility in Peru, giving
the Company a strong base from which to serve both its existing
clients in Latin America and prospective clients in newly regulated
markets in the region. Several customers, such as Wplay, Bet365 and
BetVictor, have launched tables in the new Live facility with demand
proving strong so far. Given the success of legislation in markets like
Colombia, Playtech anticipates continued favourable regulation and
strong growth in the region in the years to come.
One example of this is in Brazil, where sports betting legislation
has been passed and is expected to be implemented in the near
future. Brazil is anticipated to be a significant market given the large
population and love of sports. The Company has an exciting strategic
agreement in place with Galerabet, with economics similar to its
other arrangements in Latin America, in anticipation of regulation in
this market.
Europe ex-UK
2022 B2B revenue growth in Europe ex-UK of 31% (+31% at constant
currency) was driven by strong growth across several countries,
including Netherlands, Spain, Poland and Ireland.
The move towards greater regulation in Europe continues to
represent significant growth opportunities. The first full year of
Playtech’s new, expanded long-term strategic software and services
agreement with Holland Casino has seen an impressive start.
Playtech now supplies Holland Casino with a full turnkey multi-
channel technology package, as well as certain ancillary services.
The agreement includes the IMS platform, Sports betting, Online
Casino, Live Casino, Poker and Bingo products, plus selected
operational and marketing services. While growth rates moderated
as the year went on, the partnership is continuing to see the benefits
of its first mover advantage. It was a key driver of revenue growth in
Europe in 2022, illustrating the significant growth opportunities of
newly regulated markets. This agreement, as well as the launch of
Casino and Poker with Bet365 and Unibet in the Netherlands in 2022,
means Playtech is well positioned to capitalise on the newly regulated
Netherlands market.
Elsewhere in Europe, the Company invested in its physical
infrastructure by expanding its Live facility in Romania. The facility
now also includes Blackjack and Poker studios, enabling Playtech
to serve its customers with an even wider and more diverse suite of
products. In terms of new customers, the Live business launched with,
among others, Betsson in Italy and Pokerstars in Greece.
Playtech’s Casino business made great progress opening up new
territories with its existing customer base, such as Pokerstars and
Betsson in Greece, Leo Vegas in Spain, Betway and 888 in Italy,
Stoiximan in The Czech Republic, Betano in Bulgaria and Fortuna
in Slovakia. This clearly demonstrates the scalability of Playtech’s
business model.
Strategic Report B2B – Product Developments
Playtech remains committed to diversifying its B2B Gambling
division by bringing on new brands and licensees. As well as making
progress with new strategic agreements and joint ventures, Playtech
also maintained its track record of attracting new customers in both
regulated and regulating markets to its SaaS offering. Playtech
launched over 100 brands in the period, with more than 350 now live
since the launch of its SaaS model in 2019.
In August 2022, Playtech launched The Walking Dead™ 2, taking
advantage of the exclusive rights it acquired for Online Casino in
2021. A second title is planned to launch in 2023, with both expected
to engage and retain a large audience. Alongside partnerships
with major licensed brands, Playtech’s Casino content strategy
continues to focus on the development of original brand suites,
known as Playtech power suites, with the likes of Age of the Gods™
and Fire Blaze™ producing some of Playtech’s most popular slots.
Leprechaun’s Luck became Playtech’s top-performing new game
of 2022 and was shortlisted for Game of the Year in the 2022
EGR awards.
In terms of other notable product developments, the Live team
launched Safari Riches Live, a live casino slot game created
exclusively for 888. This marks a major milestone as it represents the
first time a slot brand developed by 888 has been transformed into
a bespoke live casino game. Elsewhere, the Live team also signed
up the exclusive global rights to Jumanji, including for the US, and
plans to launch a game in 2023. Other highlights include Everybody’s
Jackpot and The Greatest Cards Show, which have both broken new
ground technologically. Everybody’s Jackpot features first of its kind
“Unreal engine” metaverse technology, while The Greatest Cards
Show’s augmented reality and horizontal wheel – a Live sector first –
makes it one of Playtech’s most sophisticated games yet.
UK
The UK saw revenue decline 4% (-5% on a constant currency basis)
compared to FY 2021, where the positive impact of the reopening of
retail stores from mid-April 2021 was more than offset by a decline in
revenue from Entain in addition to a slowdown in the online business
caused by the uncertain regulatory climate.
The UK Government is currently undertaking a review into existing
gambling laws in the UK. In response, several operators are taking
pre-emptive measures such as stake limits and affordability checks in
an attempt to show regulators that the industry is able to self-regulate.
In December 2020, the UK Government announced a call for
evidence to review the existing gambling laws in the UK. Since the
initial 16-week call for evidence, which ended on 31 March 2021, the
Government has been assessing the evidence presented, alongside
other data, with the aim of setting out conclusions and any proposals
for reform in a White Paper. Playtech submitted data and evidence
relating to the call and will support this wherever possible going
forward. The White Paper was due to be published in 2022, but
this has been delayed with media reports suggesting it is due to be
published imminently.
Playtech remains committed to the UK market and will actively
support its customers in implementing any necessary changes
following the White Paper’s expected publication. Playtech has been
actively involved in discussions around safer game design and online
advertising for some time. By using its technology and data to support
its licensees in safer gambling, the Company is confident that it will
remain the go-to platform for regulated markets including the UK.
Other unregulated (excl. Asia)
The Group’s strategy to focus on both regulated and regulating
markets includes unregulated markets which are expected to
regulate in the near future. These are classified in the “Unregulated
excl. Asia” line within B2B Gambling. These unregulated markets
(excluding Asia) were up 11% year on year (+10% at constant currency)
versus 2021, primarily driven by very strong growth in Brazil, offset
in part by a decline in Germany, which saw regulatory changes, and
Netherlands moving to a regulated market in 2021.
In Canada, recent legislation means that single-game sports betting
is now allowed at the discretion of individual provinces. Seven
provinces, including the country’s largest province, Ontario, began
allowing bets to be placed on single-game sporting events. Since
then, as of 4 April 2022, Ontario has become the first fully regulated
online gambling market in Canada, with iGaming launched as well.
As other provinces across Canada introduce sports betting and
iGaming, the market opportunity in North America will continue to
grow. In line with the Company’s strategy to target newly regulating
markets, Playtech signed a strategic agreement with NorthStar
Gaming in January 2022.
The Company also took steps to establish its presence in South
Africa, a nascent but fast-growing market, which permits sports
betting and Live casino. Towards the end of 2022, Playtech
launched Casino and Live products with TsogoSun.
Unregulated Asia
Revenue from the Unregulated Asia business declined 18% (-21%
on a constant currency basis) compared to 2021. The decline was
largely the result of further lockdowns in China during the year. As it
stands today, the Asia business is much more diversified in terms of
both distributors as well as geographies compared to recent years.
The Company incurred a bad debt provision of €15.4 million in H1 22
following continued collection delays in the region.
Playtech plc Annual Report and Financial Statements 2022
21
Strategic Report Chief Executive Officer’s review continued
B2C Gambling
Playtech’s B2C business consists of Snaitech (including HAPPYBET)
and the White Label operations, which is primarily Sun Bingo. Overall,
B2C revenues grew 48% compared to FY 2021 at constant currency,
while Adjusted EBITDA grew 38%.
Snaitech
Italy
Snaitech delivered another year of significant growth in FY 2022, with
revenue up 54% compared to the prior year, while Adjusted EBITDA
grew 39% versus FY 2021. This exceptional performance was
primarily driven by the reopening of retail sites in Italy, which occurred
at the end of June 2021 and have since remained open.
As a result, retail sales grew significantly in the period and are within
10% of pre-pandemic levels. This is a good performance given a
small proportion of franchise retail shops closed permanently, some
customers permanently transitioned to the online channel and new
legislation – introduced in January 2020 – that requires customers
to present ID card to enter retail shops. At the EBITDA level, the
retail segment has now surpassed 2019 pre-pandemic levels on an
absolute basis, while EBITDA margins are also higher than 2019 levels
driven by an increasing proportion of revenue generated from the
higher margin sports betting segment and a lower retail sports pay out
in 2022 compared to 2019.
The online business grew 2% in 2022 versus 2021 despite retail
shops being reopened in June 2021, suggesting a combination of a
proportion of existing retail customers permanently shifting to online
in conjunction with new customers being onboarded via the online
channel. Adjusted EBITDA margins remained high at 56% in 2022
versus 59% in 2021.
As disclosed at the FY 2021 results, Snaitech has begun the formal
sale process of La Maura Racetrack in Italy. €1 million was received
on signing in July 2021, with the remaining €19 million expected
to be received in instalments in 2024. We have now received
€56 million from the sale of “non-core” land since the acquisition of
Snaitech in 2018.
Snai maintained its number one market share position (retail and
online combined measured by GGR) across Italian sports betting
brands in 2022, cementing its reputation for consistent operational
and brand strength, whilst also being a fast growing player in Italy in
the online sector when measured by GGR.
Finally, the 2023 budget law postponed the expiration of all
concessions such that all licenses in Italy, including online and retail,
have been extended until December 2024 at a total cost of €24 million
in 2023 and €34 million in 2024. Beyond 2024, talks are continuing
to find an agreement with local authorities on a common and
homogeneous set of rules.
Germany and Austria
HAPPYBET (now reported as part of Snaitech) saw revenue growth
of 10% in 2022 compared to 2021. This was primarily driven by
the reopening of retail sites and early progress after the Snaitech
management team took control of HAPPYBET’s operations. The
business remains loss making with EBITDA of €-10.8 million in 2022
(2021: €-11.4 million), but strategic and operational measures have
been taken.
In 2022, the team at Snaitech has already made good progress
upgrading HAPPYBET’s technology infrastructure, enhancing the
product and services offering, deploying new marketing strategies
and activities to increase brand awareness and realising costs
synergies between HAPPYBET and Snaitech. This will in time drive
the performance of both retail and online. Germany’s Interstate Treaty
regulated online slots, online poker and sports betting. Playtech has
been awarded one of the few available online sports betting licenses
in Germany through HAPPYBET and has already launched an online
offering. With structural growth drivers and a turnaround strategy
being implemented by a strong management team, the Group is
confident of its prospects going forward.
Sun Bingo White Label
Sun Bingo White Label saw 5% revenue growth to €65.3 million
(2021: €61.9 million) while Adjusted EBITDA was €2.0 million, down
from €6.7 million in 2021. As disclosed at H1 2022 results, reported
EBITDA includes a €10.4 million payment to terminate an onerous
contract with a former service provider. The termination of the
agreement has positively impacted the profitability of the business.
“ We are committed to
growing our business in
a sustainable way, that
builds long-term value
for our stakeholders.”
22 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Safer gambling and sustainability
As a technology leader in the gambling sector, we are committed to
growing our business sustainably and in a way that builds long-term
value for our stakeholders. To meet this ambition we have set out a
five-year strategy that sets out a roadmap that moves us towards fully
integrating sustainability and responsible business into our culture,
strategy and operations.
• Progressing towards our aspiration for workplace equality
with female representation within our leadership population
increasing to 26%.
• Reinforcing our commitment to contribute to a low carbon
future with a significant shift to renewable energy and a formal
commitment to the Science Based Target Initiative (SBTi) to set
both near-term and net zero targets.
As I reflect on our sustainability journey over this past year, I am
most proud of our efforts to safeguard and support our Ukrainian
colleagues and their families. The strength and character shown
by our people is truly humbling and inspiring. As the war continues,
we remain steadfast in our support to our affected colleagues and
their families – continuing to assist them in confronting the ongoing
challenges they face in whatever way we can, as well as providing
ongoing humanitarian aid across the country.
I am also pleased that we have continued to make progress in all
areas relating to sustainability including safer gambling, diversity
and climate change. We have taken significant steps to strengthen
sustainability governance and accountability, as well as further
enhancing our commitments on climate change and gender diversity.
Highlights include:
• Strengthening governance with frequent engagement with the
Board Sustainability and Public Policy Committee in addition to
engagement with our external stakeholder advisory panel.
• Enhancing accountability by extending the application of
sustainability-linked remuneration to executive management and
selected leaders, focusing on delivery around safer gambling,
reducing our environmental impact and diversity and inclusion.
• Expanding our engagement and partnership with our licensees
and other partners on safer gambling technology solutions through
Playtech Protect whilst also advocating for strong safer gambling
policy and standards across regulated and emerging markets.
As we look to 2023, we will focus on further embedding sustainability
into our culture and key decision-making processes.
Corporate activity
Completion of Finalto sale
Having completed the sale of Finalto to Gopher Investments in July
2022, Playtech has taken a significant step towards simplifying the
Group and to focus on its technology-led offering as a pureplay
business in the high-growth B2B and B2C gambling markets. The
sale was agreed for an enterprise value of $250 million, although this
amount was reduced to $228.1 million based on the performance
of Finalto from 1 January 2021 to completion. Completion of the
transaction also triggered payment of a break fee of $8.8 million which
Playtech is required to pay to the Consortium that had previously
agreed to acquire Finalto, while profit on disposal of Finalto amounted
to €15.1 million. The sale proceeds were partly used to repay the
outstanding balance on Playtech’s revolving credit facility with the
remainder of proceeds used for general corporate purposes.
Mor Weizer
Chief Executive Officer
23 March 2023
Playtech plc Annual Report and Financial Statements 2022
23
Strategic Report Market trends
Regulation, technology
and online: where the
market is heading
Playtech operates in a dynamic, fast changing environment and is well placed to take
advantage of marketplace trends. This section examines our operating environment
across four trends around regulation, sustainability, technology and the shift to online.
1) A super-cycle driven by a trend towards regulation
Regulation is the key driver of growth in the gambling industry
Regulation is the key driver of growth in the gambling industry. Those countries that become newly regulated tend to see strong growth early on,
which is why it is crucial for operators and technology partners to build a presence in a country that is about to be regulated or is newly regulated.
However, growth typically slows down after a certain period. This tends to be driven by three main factors. Firstly, there is increased competition
as new players enter the market, causing pricing pressure. Secondly, as markets mature, they become saturated due to limited demographic
growth. Thirdly, regulation typically becomes more stringent over time. For example, in the mature UK market, we have seen a tightening of
rules on age and identity checks and a ban on gambling using credit cards.
Deviations from the broad shape of the curve are mainly attributable to the stringency of regulations in a country. For example, Spain has
implemented strict restrictions on advertising for the gambling sector.
At this point in time, we are in an advantageous position in multiple countries across the world which are moving towards regulating gambling
or have newly regulated the sector. In the next section, we assess each of the major regions in the world and how Playtech has positioned itself.
Online growth rates moderate as regulation matures
Evolution of online gambling market growth rates following online regulation
Market growth
Argentina
Netherlands
Brazil
United States
Peru
Canada
Sweden
Chile
Germany
Colombia
Italy
Mexico
France
Greece
Spain
Point of online legalisation
Maturity of regulation
Australia
United Kingdom
Source: H2GC and Playtech estimates. Market growth based on 2022–2024e average online GGR; maturity of regulation is based on years since regulation of online adjusted for
specifics of country.
24 Playtech plc Annual Report and Financial Statements 2022
UnregulatedRegulatedStrategic Report US
State-by-state legislation in the US
The regulatory landscape in the US is subject to constant change and
development. In the four years since the repeal of the Professional and
Amateur Sports Protection Act of 1992 (PASPA) in 2018, regulation of
sports betting has progressed with more than 30 states now offering
or introducing legislation to allow sports betting. However, California
recently voted to reject the legalisation of online sports betting and in-
person sports betting at tribal casinos and private horse tracks. This
may delay legislation in states that have yet to approve sports betting,
but we expect these states to ultimately acquiesce.
iGaming, which was not subject to PASPA, is allowed at the
discretion of individual states. In 2021, the Mohegan Tribe and the
Mashantucket Pequot Tribe of Connecticut received federal approval
to operate online casino games, while Michigan launched in 2021,
joining New Jersey, Pennsylvania, Delaware and West Virginia, with
Nevada allowing online poker only. No new states have authorised
online casino in 2022, although legislation to regulate online
casino is working its way through New York’s legislature.
Current US state-by-state regulatory landscape
Regulation is the biggest market driver in the short term
States that offer only sports betting
States that have approved but not yet offered sports betting
States that offer both sports betting and iGaming
Source: VIXIO.
iGaming has not opened up at the same rate as
sports betting…
In the US, iGaming has not expanded at the same rapid pace as sports
betting since the PASPA ruling in 2018 with just six states permitting
iGaming compared to more than 30 states regulating sports betting.
…but this could change
As per VIXIO1, the tax revenue generated from iGaming in these six
states is nearly double that of the tax revenue generated from sports
betting in 30 states, which could encourage state legislatures to
consider regulating iGaming as these six states have already done.
Playtech is well placed to benefit from the trend
towards regulating iGaming
This development bodes well for Playtech. We are very strong in
this vertical and have been building the necessary foundations to
ensure we can benefit when states begin to regulate iGaming. We
have signed multi-state deals for iGaming with multiple key operators,
while we see sports betting as strategically important for key partners
in the US.
$3bn
Revenue opportunity for Playtech
US B2B revenue opportunity
Total long-term B2B addressable market of c.$3 billion
Market
size 1
Third-
party
share
Royalty share
Revenue
opp.
iGaming
$18bn x
75% x 10%–15% = c.$1.7bn
Sports betting
(online)
$23bn x 33% x 10%–15% = c.$950m
Platform (PAM) $41bn x 25% x
3%–5% = c.$410m
Total B2B opportunity (excl. structured agreements)
c.$3bn
1 Market sizes are GGR based on forecasts for online sports betting/iGaming.
Source: FanDuel CMD (2022) and Jefferies research (2021).
1
VIXIO is an independent source on fast-moving regulatory developments in the
gambling sector.
Playtech plc Annual Report and Financial Statements 2022
25
Strategic Report Market trends continued
Latin America
A region trending towards regulation
The region is shifting towards regulating the gambling industry. In the
past few years, Mexico and Colombia have both seen the regulation
of the online segment, while Peru has recently enacted legislation that
regulates sports betting and online gambling. Brazil and Chile have
gambling regulation underway with expectations of enactment in the
near future.
Several countries in LatAm with large
populations and GDP
Significant opportunity in LatAm
Country
Brazil
Mexico
Colombia
Argentina
Peru
Chile
Population
213,000,000
129,000,000
51,000,000
45,000,000
33,000,000
19,000,000
Guatemala
18,000,000
Costa Rica
Panama
5,000,000
4,000,000
Source: Worldometer, World Bank.
GDP (million)
1,600,000
1,300,000
314,000
492,000
223,000
317,000
86,000
64,000
64,000
Well placed with our structured agreements
Playtech has structured agreements in place where we expect to see
growth. Our success with Caliente in Mexico is well known (see page
13 in the “Our strategy” section), while Wplay in Colombia continues to
perform well. To take advantage of the huge potential in the Brazilian
market, we have signed a structured agreement with Galerabet in
2021. As with other partnerships, the Galerabet agreement includes
the customer software licence agreement in addition to an option
over a significant non-controlling equity stake in the operation.
Our structured agreement with Tenlot and the Red Cross brings
exclusivity in Costa Rica, where Playtech operates under the only
licence available. During 2021, we launched in Costa Rica and also
launched our structured agreement in Panama with Onjoc, under the
brand betcha, where we had the first to market advantage. Looking
ahead, we are focused on executing these opportunities to drive
growth in the region.
Several structured agreements in place in LatAm
Executing on our other structured agreements
Caliente
Mexico
Tenlot
Uruguay
betcha.pa
Panama
Wplay
Colombia
Brazil
Galerabet
26 Playtech plc Annual Report and Financial Statements 2022
Strategic Report
Europe
Europe – a mix of newly regulating and mature markets
Asia
Asia remains broadly unregulated
Gambling is a very popular pastime in Asia, which possesses
structural growth drivers such as a passion for sport, large
populations and above average GDP growth, not dissimilar to the
LatAm region. However, the majority of markets remain unregulated.
Over the long term, we see Asia following a similar path as the
Americas towards regulating the sector, but the visibility of this path
remains unclear at the present time.
Asia is increasingly a smaller part of B2B
While there have been issues in Asia with currency controls and
volatile government attitudes towards the gambling sector, it is
becoming an increasingly smaller part of the business – 44% of B2B
revenues in 2017 compared to 11% in 2022 driven by a combination of
declining Asia revenues and accelerated growth in other regions.
The market in Europe is more nuanced than the Americas region.
Some countries are opening up their online gambling market such as
the Netherlands and Germany while others are mature but still have an
underpenetrated online market, such as Italy, Spain and France. And
finally, there is the UK, which is the most mature market of all with high
online penetration rates.
Well positioned in the Netherlands and Germany
During 2021, Playtech signed a new, expanded long-term strategic
software and services agreement with Holland Casino, the state-
owned land-based casino operator in the Netherlands. This
agreement, as well as the launch of Casino and Poker with Bet365 in
the Netherlands in early 2022, means Playtech is well positioned to
capitalise on the newly regulated Dutch market.
Playtech has significant exposure to the underpenetrated online
Italian market, via Snaitech, and the German market, through our B2C
HAPPYBET business. Although HAPPYBET has underperformed as
a business, a turnaround plan is underway to focus the business on
capturing the online opportunity.
The UK is reducing in importance
Although the UK has historically contributed a significant proportion
of revenue to the B2B division, its importance is declining. In 2019, it
made up 37% of B2B revenues, which has reduced to 20% in 2022
due to a maturing UK market and the faster growing Americas and
European regions.
UK and Asia becoming a smaller proportion of B2B
Asia and UK as % of B2B revenues
2022
2021
2020
2019
2018
2017
20
24
30
11
15
17
20
32
44
Asia
UK
RoW
69
61
53
37
31
43
37
27
29
2) Growing importance of sustainability to build long-term value
ESG performance has moved from something that was of interest
to a small number of investors to a subject that commands the
attention of both the wider investment community and stakeholders
more generally. The gambling sector is no exception and, alongside
issues such as safer gambling, climate change and DEI, there
is a particular focus on how companies are demonstrating their
commitment to ethical and responsible behaviour across their
business. Having comprehensive and effective policies and
practices in place is therefore essential if the industry is to gain
and retain the trust of customers and society at large.
Safer gambling is a material ESG topic for the gambling industry.
Both regulators and the gambling industry recognise the
importance of developing safer gambling solutions, evaluating
their effectiveness and helping support research that leads
to the development of evidence-based regulation. Playtech
has been at the forefront of this process to ensure gambling
customers are able to enjoy the benefits of a safe and secure
playing environment.
BetBuddy is becoming an increasingly important tool
As player protection tools become an increasingly important
factor in a customer’s decision in choosing where to play,
Playtech’s analytics-driven BetBuddy tool (see page 36)
is an integral tool within the IMS platform.
Playtech plc Annual Report and Financial Statements 2022
27
Strategic Report Market trends continued
3) Technology – multiple technologies about to hit mainstream adoption
Data and AI
Overview
Virtual reality/
augmented reality
Overview
5G roll-out
Overview
Augmented reality (AR) is focused on
enhancing the real-world experience, with
real-time, virtual information overlaying
physical objects delivered through a device
such as a headset or mobile phone. Virtual
reality (VR) provides a completely immersive,
computer-generated 3D environment that
replaces the real world. With tech titans such
as Apple and Meta releasing next generation
headsets, we can expect to see significant,
as yet unknown, new use cases arise within
the gambling sector.
Impact on the industry/Playtech
• Should AR and VR gain broad adoption,
they could be used to vastly improve the
player experience.
• With VR, players will be able to engage
with other players and experience walking
the halls of a physical casino in the comfort
of their own home.
• With AR, there is the ability to customise a
player’s experience in a physical casino, or
within Live, to overlay real-time information
on the video stream.
• Playtech has begun to incorporate
some of these technologies in its offering.
The Greatest Cards Show within Live
has augmented reality features, while the
Poker vertical has released customisable
digital avatars.
5G is the latest new global wireless standard
and enables a new kind of network that
is designed to connect everyone and
everything together including machines,
objects and devices. It is predicted to deliver
much higher data speeds, ultra-low latency,
more reliability, a big increase in network
capacity and a more uniform experience to
more users. These benefits can usher in new
immersive experiences such as VR and AR.
Impact on the industry/Playtech
• 5G is an enabler of VR and AR
technologies and thus helps to create
games that are richer and more immersive
than before.
• Video streaming of Live dealer games can
be of a much greater quality with higher
speeds and a more reliable network.
•
In-game sports betting will benefit,
particularly on mobile. Inside stadiums,
more devices can be connected at once
with reduced latency, thus enabling fans
to place bets as they watch the game.
Outside stadiums, 5G enables fans to
simultaneously make bets and stream
the game on their mobile phones.
• The low latency of 5G could help to
facilitate more social iCasino games,
as players will be able to enjoy real-time
interactions with other players.
Link to strategy
1
2
3
4
5
6
Link to strategy
1
2
3
4
5
6
The digitisation of the world is creating
unimaginable amounts of data from all kinds
of sources. More data is being generated
every two years than in all of time before
that point. However, the key to obtaining a
competitive advantage is getting access
to the right data sets and drawing insights
from them. Those companies that are able
to attract a large number of users gain
access to the most data, which allows
them to train their algorithms to give more
accurate results. This in turn attracts more
users, triggering data network effects that
become difficult to compete against.
Better end
consumer
experience
Better brand
for Playtech
customers
More
targeted/
relevant recom-
mendations
Data network
effects
More end
consumers
Better
algorithms
More data
Impact on the industry/Playtech
The use of data to gain actionable insights
into customers is a cornerstone of the online
gaming industry. It facilitates:
• the delivery of a personalised experience
for each user, thus increasing revenue
per customer;
• new customers being acquired through
intelligent marketing;
• players being verified and the detection
of fraud; and
• tackling gambling addiction, encouraging
a more responsible industry.
Given Playtech’s sheer scale, it has access
to vast amounts of data. Playtech is investing
heavily in its analytics, business intelligence
(BI) and safer gambling tools to ensure
that it makes use of this data to retain
its competitive advantage and ensures
a sustainable future for the industry.
Link to strategy
1
2
3
4
5
6
28 Playtech plc Annual Report and Financial Statements 2022
Strategic Report 4) Shift to online continues, accelerated by the pandemic
Live
Overview
Underpenetrated online
markets in Europe
Overview
Sports
Overview
As the market shifts to online, the Sports
segment is impacted by multiple trends:
• convergence of sports betting, media
streaming and social;
• emerging markets shifting
towards embedded betting within
streaming services;
• shift to in-play betting with the types
of bets becoming more granular; and
• more and more data sources being used
to come up with sports betting odds such
as fitness of players.
Impact on industry/Playtech
• Our Sports offering is targeted at those
areas where we see strategic benefits.
One such region is LatAm, where many of
the countries enjoy a rich sporting culture
and we have made good progress in
Mexico, Colombia and Panama.
• Our Betbuilder product, now available for
football with other sports to follow, will be a
focus of our Sports offering given the trend
of shifting towards offering more granular
types of bets.
Link to strategy
1
2
3
4
5
6
Live is an extremely attractive vertical that is
expected to grow significantly over the coming
years. This is driven by two major trends:
• Firstly, there is a shift to online from
retail as the world digitises and this
has accelerated due to the pandemic.
• Secondly, within online, there is a growing
trend away from random number generation
(RNG) towards Live, as players want more
of an interactive, immersive experience.
With the imminent launch of VR by tech
companies such as Apple, we expect this
shift to accelerate.
The combination of these drivers means
industry analysts predict the Live market
to reach $18 billion based on GGR by 2025,
up from $6.9 billion in 2021, a CAGR of 28%.
Impact on industry/Playtech
Playtech has already made significant
investments to capitalise on this attractive
product vertical:
• Ten studios are currently operational
with a further one in Pennsylvania under
construction. The latest one to open is in
Peru which was launched earlier this year
and will help us to support growth within the
attractive LatAm region, particularly Brazil.
• The number of tables has more than
doubled over the past four years.
• Significant investment has been made
to ensure we have the latest cutting-edge
technology and access to branded
gaming rights such as Jumanji™.
These investments have already been
made, and the nature of the Live business
model is such that additional players can be
added to tables at minimal cost. This creates
significant operating leverage and leads to
Live being margin accretive to the overall
B2B division.
Link to strategy
1
2
3
4
5
6
The pandemic accelerated the shift towards
online gambling as retail shops were closed
during lockdown and customers, with plenty
of time to pass, played online. We await to see
how structural this shift is over the coming year.
However, early indications suggest the migration
to online has remained sticky post pandemic, with
all major countries in the EU seeing at least a seven
percentage point rise in online penetration from
prior to the pandemic in 2019 compared to 2022.
There is ample scope for the migration to online
to continue. Looking to the UK as an example
of a mature market, online penetration in 2022
was just under 60%, far in excess of Spain, Italy
and Germany.
Impact on industry/Playtech
Within the B2C division, Playtech is very
well placed to continue to benefit from an
underpenetrated online market in Europe. In
Italy, Snaitech gives Playtech exposure to a
large market where online penetration remains
at 26%, far below the UK at 58%. In addition,
the online business is higher margin and less
capital intensive, meaning it generates higher
returns. Aside from Italy, Playtech is also well
placed in Germany with HAPPYBET, which
possesses one of the few available online
sports betting licences in Germany.
Within the B2B division, Playtech has a
strong presence in Spain across Live, Casino
and Sports, and is well positioned to take
advantage of the continued shift to online.
Several large European countries
have an underpenetrated
online market
Online penetration as % of GGR
55
58
28
41
23
30
15
26
15
25
UK
France
Spain
Italy
Germany
2019
2022
Source: H2GC (includes betting and gaming and
excludes lotteries).
Link to strategy
5
3
4
2
1
6
Playtech plc Annual Report and Financial Statements 2022
29
Strategic Report
Business model
Flexibility to capture
every opportunity
B2B
Services
Content
Platform
Clients
Conventional
Structured agreement
SaaS
• Entain
• Bet365
• Parx
• Flutter
• WynnBET
• BetMGM
• Caliente
• Wplay
• Galerabet
• NorthStar
• Tipico
• Novibet
• Lowen Play
• RET
• Betway
• Leader-bet
How we work
Conventional model
Platform + content
Structured agreements
Platform + content + services
The conventional model involves us providing the operator
with a platform-based solution, underpinned by Playtech’s
leading Information Management Solution (IMS) offering. The
operator can then choose from a wide range of product verticals
and content, including Live, Casino, Sports, Bingo, Poker
and Virtual Sports.
We also partner with “local heroes” with a strong retail brand
and presence but without the necessary technological expertise
to succeed online. Under a structured agreement, we provide a
platform-based solution as per a conventional model, in addition
to a range of marketing and operational services, some of which
are subcontracted out to a third party.
The operator, which holds the gambling licence, is typically
responsible for building and maintaining its brand in addition
to customer services and marketing. In exchange for providing
the technology, Playtech employs a revenue share model with
the operator.
This model also involves a revenue share framework with
the operator, with Playtech’s share typically higher than in a
conventional model to compensate for the provision of these
additional services. Playtech also typically injects capital into these
operators to help facilitate growth and in return receives an equity
call option which can be exercised should the operator be acquired.
Value accrued
to Playtech
End customers
Licence held by operator
Standard B2B
royalty income
for technology
Marketing
Operations
Portal/Channels
Content
BI/Analytics
IMS platform
Engagement Centre
Player Management
Wallet
Value accrued
to Playtech
Standard B2B
royalty income
for technology
+
Additional
revenue to
compensate
for extra
services
+
Call option on
equity
End customers
Licence held by operator
Marketing
Operations
Portal/Channels
Content
BI/Analytics
IMS platform
Engagement Centre
Player Management
Wallet
Payments
Risk/KYC/AML
Safer Gambling
Payments
Risk/KYC/AML
Safer Gambling
Playtech provides/subcontracted
Operator provides
30
Playtech plc Annual Report and Financial Statements 2022
Strategic Report B2B
How we work
B2C
Snaitech
1
2
Snaitech accrues all value.
Snaitech accrues a portion
of value.
Our B2C division is comprised primarily of Snaitech in Italy and HAPPYBET, the retail
and online Sports B2C business in Austria and Germany. Both businesses are led
and operated by the Snaitech management team.
Snaitech is a leading operator in the Italian betting and gaming market, and generates
revenues from gaming machines, retail betting and online gambling. The business
was acquired by Playtech in 2018, bringing together Playtech’s leading technology
stack with Snaitech’s powerful brand and local expertise in one of Europe’s largest
gambling markets.
Retail
The retail betting business predominantly operates a franchise model with franchisees
responsible for staff costs, rent and facilities, while Snaitech itself provides the licence,
content, technology and brand.
The franchise model generates growth with relatively low capital intensity, generating
high return on capital. Meanwhile, the value sharing agreement with franchisees is at
the revenue level, meaning Snaitech is less affected by rising cost pressures.
The Gaming Machine segment predominantly consists of Video Lottery Terminals
(VLTs) and Amusement with Prizes (AWPs). Snaitech has a higher revenue share
from VLTs but incurs the cost for content from operators, while for AWPs, the machine
owner takes a higher revenue share but incurs the cost of hardware and content.
Further detail is provided in the table below.
Retail
Players in value chain Share of NGR
Responsibilities
Franchisee
45%–50%
Staff, rent and facilities
Licence holder1 55%–50%1 Licence, brand, content, technology, trading and risk1
Sports
betting
Gaming
machines
VLT
Platform owner
10%–12%
Hardware, software and content
Location owner 55%–50%
Security, location costs and staff
Licence holder1 35%–38%1
Licence1
AWP
Machine owner2 37%–40%2
Machine installation and maintenance2
Location owner 55%–50%
Security, location costs and staff
Licence holder1 8%–10%1
Licence1
Online
The online business operates a direct-to-consumer model, with Snaitech paying a
share of revenue to the retail franchisee owners should they sign up customers at their
retail site or to affiliates which direct customers to Snaitech’s online site. Platform and
content costs, part of which are supplied by Playtech, are incurred by Snaitech.
Online
Players in value chain Share of NGR
Responsibilities
Sports
betting
and
casino
Platform and
content owner2
Affiliates/retail
sites
10%–15%2
Platform and content2
20%–25%
Customer acquisition
Licence holder1 70%–60%1 Licence, tech, trading, risk and customer services1
Playtech plc Annual Report and Financial Statements 2022
31
SaaS
Content
For those operators that have their own
platform, we also offer customers the
ability to access our content, in a plug-
and-play SaaS model. Operators benefit
from low implementation costs and quick
time to market, while Playtech is able
to expand its addressable market and
generates a recurring, monthly revenue
stream at a higher margin.
Strategic Report Business model continued
Our strengths
1
Unparalleled scale in the
gambling industry
Playtech’s global scale and distribution capabilities, with over
180 licensees operating in over 40 regulated markets and with
offices in 20 countries, mean it is ideally positioned to provide its
technology to operators in new regulated and regulating markets.
Given its scale, the data that Playtech leverages enables it to
improve product design, develop cutting-edge safer gambling
tools and support regulatory requirements of operators in various
jurisdictions. Together, this intelligence and insight leads to a safer
gambling environment and an improved customer experience, as
well as improved value for end users.
2
Award-winning
technology
Playtech’s leading B2B technology offering has been driven by a
history of innovation. Playtech has consistently invested in R&D to
deliver its technological innovation and industry-leading products
to the gambling industry. Innovations from Playtech include
being the pioneer of omni-channel technology and content
integration in the gambling industry. Playtech’s scale allows it
to consistently invest in R&D and product-related investment
at higher levels than its peers. In the last five years Playtech has
made over €674 million of R&D and product-related investments,
which is significantly more than its peers, and ensures all Playtech
customers will benefit from cutting-edge technology indefinitely.
€674m
Amount invested in R&D over the last five years
3
Flexibility to cater to almost
any operator
Playtech’s flexible B2B technology offering positions it well
to partner with operators under most scenarios. Playtech’s
Information Management Solution (IMS) platform provides all the
tools necessary to successfully run and manage every aspect of
a licensee’s business, while the modular architecture allows it to
also address the bespoke needs of specific operators.
At the same time, Playtech has one of the broadest content
portfolios in the gambling industry with a huge array of options,
supplemented by access to third-party content via our Playtech
Open Platform (POP).
32
Playtech plc Annual Report and Financial Statements 2022
4
Leader in highly attractive
Italian market
Playtech’s Italian B2C business, Snaitech, is a leading player in the
highly attractive Italian online market. Italy is the second largest
gambling market in Europe, with a total GGR of over €14 billion in
2022. The online segment has seen significant growth at a CAGR
of 21% between 2019 and 2022, yet it remains less developed than
retail, with online penetration at only 26% in 2022 (versus 58% in the
UK). Snaitech’s leading brand and retail presence in Italy, combined
with Playtech’s technology expertise, make it ideally positioned to
continue capturing this market opportunity.
€14bn
Size of Italian retail and online market in 2022 (GGR)
5
Our
people
Playtech’s capable, dedicated and passionate colleagues are
our greatest asset. The entrepreneurial culture that empowers its
people to seek out growth opportunities sets it apart and helps
to ensure Playtech is well positioned to deliver on its strategic
objectives. We aim to attract and retain the very best by creating
an environment for colleagues based on respect, personal
growth, recognition and development of talent, and a sense of
belonging and purpose.
6
Focus on
sustainability
Playtech is committed to helping build a safer, more sustainable
entertainment industry for the benefit of all stakeholders and in
2022 continued progressing on Sustainable Success, its five-year
sustainable and responsible business strategy. A key focus for
Playtech is to cement its position as an industry leader in safer
products, data analytics and player engagement solutions. In
2022, Playtech continued to make progress in all areas relating
to sustainability including safer gambling, diversity and climate
change. We have taken significant steps to strengthen sustainability
governance and accountability, as well as further enhancing our
commitments on climate change and gender diversity.
Strategic Report
Supporting our stakeholders
For customers
For society and the environment
€152m
Amount invested in cash R&D including safer
gambling initiatives
>100
Number of charities and community
supported organisations
c.55mNumber of poker tournaments
11.7%
Reduction in tCO2 emissions in 2022 v 2021
For employees
For shareholders
Jobs (i.e. number of employees)
c.7,000
>100
Number of wellbeing initiatives
Adjusted operating cash flow
€397m1
c.€1bn
Cash returned to shareholders over past ten years
1
Adjusting for changes in jackpot balances, client deposits and client equity,
professional expenses on acquisitions and ADM security deposit.
Playtech plc Annual Report and Financial Statements 2022
33
Strategic Report
Product and innovation
Award-winning
technology delivering
personalised solutions
for operators and
players
Through our proprietary technology solution, Playtech
has pioneered omni-channel gambling technology
which provides an integrated and open platform across
retail and online for all key verticals, delivering a safe
and seamless customer experience.
i
s
e
c
v
r
e
S
t
n
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o
c
d
n
a
m
r
o
f
t
a
P
l
E
N
O
h
c
e
t
y
a
P
l
Marketing
Operational
Desktop and mobile
Native apps
Portal
Retail machines
Retail till
Playtech Open Platform
IMS platform
Playtech Protect
l
A
n
a
y
t
i
c
s
34
Playtech plc Annual Report and Financial Statements 2022
Strategic Report
Platform
IMS platform
Our offering
2022 highlights
Playtech’s Information Management Solution (IMS) is the
power behind Playtech’s products, providing all the tools
necessary to successfully run and manage every aspect
of a licensee’s business.
• A new back-office user interface, deployed across all sites and
offering an improved overall user experience, with single sign-on
capabilities across multiple licensee sites and verticals (Sports,
Casino, Live, etc.), offering easier management and greater security.
IMS enables licensees to access all elements of Playtech’s unique
omni-channel capabilities allowing players to seamlessly transition
across content verticals via a single account and single wallet, while
providing operators with simple third-party integration and full visibility
and control of the entire player lifecycle.
IMS unifies Playtech products across all channels, including retail,
presenting operators with a single account overview and allowing
them to streamline and optimise marketing spend, maximise cross-
sell and conversion potential, leverage player loyalty and value and
increase revenues by utilising data and automating key aspects of the
player journey. The below graphic describes the key elements that sit
within the IMS platform.
• Marketplace integration, allowing licensees to add games to their
websites in just a few clicks, further speeding up time-to-market delivery.
• Our revamped CRM user experience simplifies processes for licensee
admin teams and drives more effective player communication.
• Our integrated BI enables users to see data from multiple sources in
one place, while the Dashboard Generator offers the power to build
dedicated dashboards or to embed graphs into any IMS interface
using any data source accessible in the Report Viewer.
• New security protocol support, including two-factor authentication
and trusted devices, streamlines the ability to securely re-access
the system if accidentally locked out.
38mNew player accounts added to IMS in 2022
Sitting within the IMS platform
Wallet – a single wallet per
player account across all
channels, including retail,
creating an omni-channel
experience for players
and allowing licensees to
centrally manage all financial
transactions and bonuses.
Reporting – the tools
necessary to produce both
pre-set and custom reports,
create dashboards and monitor
KPIs, ensuring operators can
monitor the performance of
their business.
Engagement Centre – a
comprehensive marketing
and player engagement
toolset, leveraging the full
personalisation power of IMS.
IMS
platform
Risk/KYC/fraud – a
comprehensive toolset
covering source of funds
checks, duplicate and multiple
account checks, third-party
integrations, automation rules,
mass adjustments and more.
Player Management – a
single account overview gives
licensees full visibility and control
of the entire player lifecycle.
Payments – facilitates
collection, processing,
adjustments and corrections,
plus payment method support
and merchant integrations.
Playtech plc Annual Report and Financial Statements 2022
35
Strategic Report
Product and innovation continued
Platform continued
Engagement Centre
Part of the IMS platform, the Engagement Centre brings
together Playtech’s entire CRM toolset, some of the
industry’s most sophisticated player personalisation and
communication products, designed to enable operators to
engage with players as effectively as possible throughout
the entire lifecycle. The Engagement Centre is also integrated
with our Playtech Protect platform, creating opportunities
for bespoke safer gambling messages and interactions.
2022 highlights
• Cross-vertical integration of the Engagement Centre continues,
with key tools now available for Sports and Bingo in addition to
Casino and Live.
•
Additional integrations with third-party providers.
• Licensee uptake also continues to grow, with a more than 25%
year-on-year increase and an average of 500,000 messages sent
per day across email, SMS and inbox widget channels.
• Additionally, integration with third-party vendor Gift & Go enables
licensees to offer physical prizes and rewards via Player Journey,
with Amazon providing fulfilment.
500k
Messages sent per day across email, SMS and inbox widget channels
Playtech Engagement Centre
When to engage?
Market automation
Who to engage with?
Data-driven segmentation tools
Brings together all
the engagement
elements of IMS
across all product
verticals
What to provide?
Player rewards
How to engage?
Communication tools
Safer gambling
Our offering
Highlights in 2022
BetBuddy is our ground-breaking responsible gambling
(RG) analytics platform, built around data mining and
predictive analytics.
• BetBuddy has expanded into three new jurisdictions
in 2022, having been adopted by clients in Germany,
Portugal and Switzerland.
It combines the latest research into gambling behaviour patterns
with the power of artificial intelligence, delivering a sophisticated
solution to proactively identify and engage with players who might
be at risk. BetBuddy has a strong academic curriculum, with over
60 peer-reviewed papers and conference presentations, focused
on gambling harms, safer product design and AI.
BetBuddy segments players according to customisable criteria
and tags them for clear differentiation. Thanks to these tags,
operators can build Player Journeys, which enable personalised
safer gambling interactions, both via automatic in-play messages
and person-to-person conversations.
• Scalable cloud architecture enables the platform to cope with
the growth of its customer base. Additionally, BetBuddy’s
dashboard is now available through Microsoft Power BI, which
can offer an endless combination of customised reports.
• A four-year breakthrough research project with two major
European universities has launched, with the objective of
building a library of player-tailored RG interventions. We have
published two research briefings – one on the behavioural
features that are the strongest markers of harm identified by
BetBuddy, and one on the effect of the introduction of a stake
limit for online slot games in Germany.
• The methodology and experience of the use of behavioural
analytics have been shared with gambling regulators in Europe,
North America and South America, and discussed with the
European Commission.
36 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Content
Playtech has one of the broadest content portfolios in the gambling
industry with a huge array of options across the industry’s most popular
product verticals. The next section outlines Playtech’s offerings across our
six main verticals along with highlights in what has been an exciting year.
Mega Fire BlazeTM Roulette –
building a global roulette brand
An ongoing success story for Live Casino has been the
continued growth of Mega Fire Blaze™ Roulette Live. Based
on one of Playtech’s most popular slots suites, this multiplier-
driven game has captured the attention of audiences
worldwide since first launching in May 2021. In 2022 alone,
the roulette ball in the original Mega Fire Blaze™ Roulette
Live in the Eurolive studio in Riga has travelled the equivalent
of 1.5 times around the world, with over 7 million multiplier
prizes awarded.
In May 2022, Mega Fire Blaze™ Roulette Live launched
in Spain, quickly becoming a market-leading product. Its
continued success has captured the interest of many major
partners, with William Hill and Entain both launching bespoke
versions of this key table in 2022.
The success of Mega Fire Blaze™ Roulette Live has resulted
in nearly 25% of all players on the Live network playing
this product. As a result of this success, Mega Fire Blaze™
Blackjack Live and Mega Fire Blaze™ – Lucky Ball are due to
launch in the future, in addition to our first Mega Fire Blaze™
Roulette Live table in the US. This extension of the franchise
not only has the potential to build on the significant Roulette
player base, but also creates an ideal cross-sell opportunity,
attracting fans of the slots suite to the Live vertical.
Our offering
Playtech’s Live technology brings the real-life casino
experience to the online environment. Live casino games,
hosted by dealers in specially designed studios, are streamed
online, where players can place bets on their computers and
communicate with the dealer using the chat function.
We’re dedicated to delivering the most authentic and engaging
omni-channel Live experience for our partners, driven by a
cutting-edge platform using the latest business intelligence
data-driven technology. Our ten state-of-the-art studio spaces in
key markets worldwide are home to industry-leading audio visual
technology, combining networked tables and games with bespoke
space for several tier one licensees.
Our extensive, entertainment-driven Live content offering, hosted by
native-speaking dealers and presenters, ranges from casino classics
such as Blackjack, Baccarat and Roulette, to innovative variants
and gameshow-style content, including The Greatest Cards Show,
Everybody’s Jackpot Live, Quantum Blackjack and Roulette, Buffalo
Blitz Live Slot, Football Roulette and Adventures Beyond Wonderland
Live. Our range also includes popular cross-vertical Playtech brands
such as Mega Fire Blaze™ Roulette and Age of the Gods™ and content
designed around globally popular licences, including The Money Drop™,
Who Wants to Be a Millionaire?™, Jumanji™ and Fashion TV™.
2022 highlights
In the busiest year yet for Live, the expansion and diversification of
both our games portfolio and studio space have continued rapidly.
Our flagship new games of the year, Everybody’s Jackpot and The
Greatest Cards Show, have both broken new ground technologically,
with Everybody’s Jackpot featuring first of its kind “Unreal Engine”
Metaverse technology, while The Greatest Cards Show’s augmented
reality and horizontal wheel – a Live sector first – make it one of our
most sophisticated games yet. With a clear focus and dedication
to our partners, we launched several successful bespoke games
including Well Well Well for Ladbrokes. Elsewhere, we continue to
build major media partnerships, signing global rights (including in
the US) for Jumanji™ in 2022.
On the studio side, our new Live facility in Peru provides bespoke
products specifically for LatAm markets and has experienced strong
initial demand with Brazil now one of Live’s biggest markets. Our
expanded facilities in Romania, led in part by demand for dedicated
solutions, also include new Blackjack and Poker studios. We continue
to grow our US infrastructure, opening our first dealer tables in New
Jersey, with Adventures Beyond Wonderland Live soon to launch in
that market, followed by Mega Fire Blaze™ Roulette Live in Michigan.
Playtech plc Annual Report and Financial Statements 2022
37
Strategic Report Cash Collect™ – Playtech’s
latest power suite
Alongside partnerships with major licensed brands,
a key part of Playtech’s Casino content strategy is the
development of original brand suites, with the likes of
Age of the Gods™ and Fire Blaze™ producing some of
Playtech’s most popular slots.
Known as Playtech power suites, these games combine
innovative design with a distinctive look and feel, encouraging
players to engage with the brand and look forward to new
releases within the suite.
Launched in 2021, Cash Collect™ has become one of
Playtech’s most successful suites to date. The first release,
Sahara Riches™, became Playtech’s top-performing new
game of 2021, while Leprechaun’s Luck claimed the title for
2022 and was shortlisted for Game of the Year in the 2022
EGR Awards.
As Cash Collect™ is built around an engaging core mechanic
rather than a central theme, the suite can be flexibly expanded
to include seasonal and event-based content and, in a first
for Playtech, games based on licensed brands. Recent
new releases include Halloween launch Witches, Football!,
launched in line with the 2022 World Cup, and the ground-
breaking The Walking Dead™: Cash Collect™ – bringing
together one of Playtech’s best known licences and strongest
in-house suites.
Product and innovation continued
Content continued
Our offering
Playtech Casino offers one of the industry’s most extensive
range of “game of chance” based online slot games,
delivering over 900 innovative in-house and premium
branded titles through online or retail channels.
Major original brands include Cash Collect™, Age of the Gods™, Fire
Blaze™ and the Blitz™ suite, while our range of exclusive film, sport
and entertainment tie-ins includes the Sporting Legends™ series,
plus titles from major Hollywood studios such as MGM, Universal,
Paramount and AMC. With eight distinct global studios developing
content under the Playtech umbrella, we offer an extensive selection
of games to suit a range of demands. In-game engagement tools such
as leaderboards, Mystery Parcels and engagement games empower
licensees to increase player engagement through gamification.
>900 8
Titles in portfolio
Global studios developing content
We give customers the tools to build native apps that are iOS
compatible by using a Software Development Kit (SDK) without
the need for any additional software developers. The native SDK
offers fast, straightforward game integration, allowing operators to
incorporate Playtech Casino games directly into their app for delivery
to the App Store, incredibly important for cross-sell activities between
Sports and Casino.
2022 highlights
2022 proved to be a strong year for Casino. The “power suite”
strategy continues to be a success, with the Cash Collect™ suite
established as a top performer. Exciting expansions to our global
brands portfolio include the new additions to our Sporting Legends™
suite, including Roberto Carlos and Frank Bruno, with Rocky™ and
Gold Rush in the pipeline for the future, in addition to the expansion
of our exclusive The Walking Dead™ series. A strong mix of content,
from classic fruit machine-style games and innovative releases, such
as the “crash” style Circus Launch™, and localised content tailored
to specific regions, through to seasonal content around events
such as St. Patrick’s Day, the football World Cup, Halloween and
Christmas, creates a diverse portfolio with a wide range of marketing
opportunities for licensees.
The introduction of new functionality such as Engagement
Games and Game Events visibility has led to increased feature
adoption amongst licensees, including tier one partners such as
Bet365 and Sky.
>60Number of games launched in 2022
38 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Our offering
Our offering
Playtech’s Poker product features everything licensees
need to launch their own fully branded, customisable online
poker rooms, with multiple game types, table stakes and
tournament buy-ins.
All iPoker networks, for international as well as ringfenced regulated
markets, offer great liquidity pools and attracted an average of
330,000 players a month during 2022. Marketing and engagement
tools such as hybrid missions, leaderboards and integrated
player rewards are central to an evolving “gamified” experience,
in line with our strategy to appeal to a wider demographic with
long-term potential.
2022 highlights
Following a resurgence in the online poker market throughout 2020
and 2021 due to COVID-19, Playtech Poker has experienced record
numbers again in 2022, with seven new operators joining the iPoker
networks during the year. In line with customer preferences, Playtech
has focused on an improved tournament offering, including more
multi-table tournaments (MTTs), a revamped tournament schedule
and more promotions for MTTs. These changes resulted in a boost
in player engagement during the summer months, typically a quieter
period for the Poker vertical.
Improvements to marketing and engagement tools have continued
throughout 2022, including the introduction of features like player
badges, animated 3D avatars and emoji packs, while new functionality
such as the option for players to make a deal to split prize money in
twister tournaments has created a more flexible experience.
We have implemented and delivered our mobile app across both iOS
and Android, with an improved lobby look and feel, making it easier
to find games and assets.
Playtech’s Sports delivers a full range of sports betting
technology, managed trading services and physical
equipment, catering to online operators and traditional
retail/betting shop businesses of all sizes in major regulated
markets worldwide.
A user-focused, data-driven design ensures the Sportsbook is
tailored to our operator’s audience. Playtech Sports boasts a wide
distribution, with around 400 million sports bets placed via our
technology on more than 500,000 events in 2022.
Including Snaitech, Playtech has c.60,000 bet entry points live in
retail locations worldwide, including kiosks/self-service betting
terminals (SSBTs), traditional over-the-counter (OTC) offerings
and space-saving devices such as compact terminals and tablets,
designed especially for smaller venues. Our shop TV solution also
allows operators to display the latest odds for any sport and promote
specific events.
2022 highlights
In a challenging market, 2022 has been a year of transition for Playtech’s
Sports vertical. Playtech has focused on modernising its product
offering to take full advantage of major forthcoming opportunities,
especially across the ever-expanding Americas market. A modernised
code base, along with upgrades to our core GenBet and transaction
system technology, is key to ensuring our platform is both highly scalable
and more robust in preparation for the ongoing and long-term expansion
of our customer base. We have also completed further integrations
to the IMS, including Player Journey, part of the wider Engagement
Centre toolset, for greater personalised customer communications
and more flexible player rewards. This work also facilitates a more
seamless user journey from a real-time CRM standpoint.
In terms of technological advances, Betbuilder for football is now available
to go live, with other sports including basketball and American football
soon to follow in a vital step forward for the US market.
Progress across the strategically important LatAm region has
been strong, with successful launches including betcha in Panama
and Codere in Mexico alongside a continued strong performance
across retail sports from Mexico’s Caliente and Colombia’s Wplay.
An impressive start from Holland Casino in Europe, which has taken
Playtech’s full suite of products, signals an encouraging trend for
Playtech’s Sports vertical in 2023.
Playtech plc Annual Report and Financial Statements 2022
39
Strategic Report
Product and innovation continued
Content continued
Our offering
Our offering
Playtech’s pioneering omni-channel Bingo solution allows
players to enjoy the same seamless experience across any
platform and on any device, including retail, all through a
single wallet and a single account.
Playtech’s platform acts as an aggregator for both content and wallet
systems, allowing content suppliers to integrate seamlessly with it.
Our UK Bingo network consists of more than 20 brands and manages
more than 60,000 daily players and 20,000 daily concurrent players.
2022 highlights
In a major milestone for Playtech’s long-term partnership with Buzz
Bingo, Playtech’s single wallet solution went live across Buzz’s entire
digital and retail estate in July 2022. This gives players the flexibility to
deposit funds online and use them in a physical club (and vice versa)
or withdraw winnings in any location. The launch of Buzz Live Bingo in
September is already driving a strong incremental NGR uplift, with no
cannibalisation of existing rooms.
Elsewhere, Playtech welcomed EPlay24 – the fastest growing
operator in the history of the Italian Bingo market – to its network,
whilst the relaunch of Britain’s Got Talent Bingo for Mecca Bingo
and the launch of Loyalty Rooms for Sky Bingo are among the major
developments for Playtech’s long-term partners.
Playtech’s Virtual Sports technology fully simulates a range
of internationally popular sports, including creating virtual
leagues, venues and players by combining market-leading
3D game animation graphics and Hollywood motion
capture technology.
Additionally, on-demand casino games and scheduled sports betting
options including horse racing, greyhounds, football, ice hockey,
basketball, tennis and motor sports ensure a continual stream of
content. Virtual Sports provides a host of betting opportunities all
year round, empowering licensees to deliver a compelling, diverse
proposition across digital and retail channels even when real-world
sporting markets are quiet.
2022 highlights
In February 2022, Playtech signed a ground-breaking five-year deal
with The Jockey Club to develop an exclusive range of new Virtual
Sports content. A prestigious and historic brand, The Jockey Club is
home to some of the world’s most iconic racecourses, and has the
appeal to attract audiences internationally.
Built around real-life data, including meeting and course names,
race names and distances, the first Virtual Sports game in the series,
Epsom Downs, replicates the course layout, grandstand, finish and
start lines and more in a ground-breaking 3D environment.
Further innovative game launches in 2022 include: Keno, a high value
wins numbers game; and Football League, a season of matches
played concurrently to facilitate accumulator game play.
2022 highlights
• The deployment of a new BI model helps operators predict which
players are likely to leave the game, giving them the option to offer
bonuses to encourage them to stay.
• Significant improvements to player segmentation enable targeting
at a more granular level, for example based on which product
verticals players prefer and how often they play.
Analytics
Business intelligence technology (BIT), built using artificial
intelligence (AI), provides new and existing licensees with
superior innovation for their next stage of growth.
Playtech’s exclusive data-driven business intelligence marketing
technology significantly enhances licensee revenues by improving
player experience and increasing lifetime value. Added AI functionality
gives licensees the tools to analyse big data and leverage real-time
automated insights into players’ behavioural patterns to create a
personalised gaming experience.
We offer the ability to segment players and personalise
communication based on their behaviours, improving player
experience. At the same time, AI functionality enables personalised
safer gambling interaction, powered by BetBuddy. AI functionality
is now embedded across Playtech’s IMS platform and is used by
Playtech’s leading tier one customers.
40 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Services
Making the most of Playtech’s technology
Through partnering with over 180 licensees globally, Playtech has amassed a huge amount of knowledge on the gambling industry including
customer acquisition and retention, how to manage risk and operational know-how. For those operators that are looking to launch online in newly
regulating markets, this know-how can prove invaluable in ensuring that they make the most of the opportunities of an expanding addressable
market. For those that are already established, our services can offer a way to get the most out of Playtech’s technology to help deliver further
growth. We break down our services offering into three segments: marketing services, operational services and consultancy and training.
Marketing services:
Our marketing services are typically targeted at those operators where
we have a deep relationship such as strategic agreements.
Customer acquisition
Executing best practices and strategies in external marketing
to execute and promote marketing campaigns in line with
an agreed marketing plan and budget. We are experienced
across all customer acquisition channels and look to build
relationships with partners to ensure maximum value.
Customer retention
Developing and executing marketing strategies to retain,
grow and maximise player value while achieving high levels
of engagement and in line with regulatory and compliance
frameworks and procedures. We have experience across
all communication channels including social media and
gamification and can deliver valuable bonus strategies
across all product verticals.
Operational services:
Our operational services are typically available for those customers
which use our technology under a conventional business model.
Customer
onboarding
Assisting the operator
in configuring
their customers’
onboarding journey/
flow. We configure the
technical set-up for the
system and oversee
ongoing results to
ensure business
performance.
Risk
management
Delivering fraud
prevention services
for the operator to
minimise reputational
and financial losses.
We also offer AML
services to ensure
operators adhere
to regulatory
requirements.
Customer
experience services
By combining our
expertise in regulatory
frameworks, customer
protection and leading
delivery, we provide
high-quality customer
experience services
using AI-driven
solutions at scale.
Payments processing
Overseeing the
processing of cash
out requests by
customers from the
point of the request to
the moment they leave
our platform as an
“approved” outgoing
transaction in line with
risk management/
fraud prevention/AML
controls.
Technical
delivery services
Delivering the
necessary back-office
configurations in IMS
to ensure operators
optimise Playtech’s
technology.
Consulting and training:
Our consulting and training services ensure an easily accessible source of industry
and operational knowledge to get the most out of Playtech’s technology.
Playtech Academy and training
playtechacademy.com is the award-winning website that
acts as a portal where operators and Playtech employees
alike can self-serve a wide range of content including
videos, presentations, podcasts, thought leadership and live
webinars, to enhance their knowledge of Playtech products.
Consulting
Our experienced consultants, across a wide range of
locations and covering multiple verticals, help support
operators in implementing industry best practice to get the
most out of Playtech’s technology. Activities are linked to
clearly defined and measurable KPIs.
Playtech plc Annual Report and Financial Statements 2022
41
Strategic Report
Product and innovation continued
A flexible offering
A plethora of options to fit our licensees’ needs
SaaS
For those operators that have their own platform, we also offer the ability to access our content, in a plug-and-play SaaS model.
Operators benefit from the ability to access Playtech content without having to license the IMS platform with low implementation
costs and quick time to market, while Playtech expands its addressable market.
The SaaS model can also be used to provide a low friction method of exposing as many operators as possible to Playtech’s technology.
Once operators see the quality of Playtech’s content and technology, the path to offering additional Playtech products becomes easier.
Playtech has been building out the infrastructure for its SaaS business since 2017 including data centres in local markets. As a result,
Playtech is ready to accommodate a large number of operators across its infrastructure and has added over 350 brands since launching
the SaaS offering.
>350
Brands added since launch of the SaaS offering
Modular
Our IMS platform capabilities can also be broken down into a
set of easily identifiable services with distinct integrations. This
componentisation of our software allows the delivery of a more
agile distribution of our technology – ultimately making the
data-driven capabilities in IMS more modular and allowing more
operators to access the capabilities they need. By delivering
a more agile solution we are extending our reach to additional
operators and allowing them to deploy our technology in a quicker
and more cost-effective way. This increases our cross-sell
capabilities with our licensees.
Playtech Open Platform and Games Marketplace
Playtech Open Platform (POP) allows licensees to access more
than 10,000 of the industry’s most popular online and mobile in-
house and third-party games at any time, across any channel and
on any device, ensuring licensees can offer their players a broad
range of content. The Games Marketplace allows operators to
discover and configure Playtech and third-party content, and
monitor their performance, regardless of the technology that
the game was built in. This also increases the amount of data
that Playtech can access, improving our analytics offering and
increasing network effects.
Componentising the IMS platform
IMS
Engagement
Centre
Player
Management
Wallet
Payments
Risk/AML
/KYC
Safer
Gambling
Marketplace business
model unleashes
powerful network
effects
Better brand
for Playtech
customers
Better
customer
experience
More end
consumers
Network
effects from
third-party
content/Games
Marketplace
More choice
for end
consumers
Attracts more
third-party
content
42 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Stakeholder engagement
Engaging constructively
with all stakeholders
Playtech’s success is reliant on maintaining strong relationships with stakeholders.
As a technology leader and trusted service provider in the gambling industry, Playtech’s success is built upon maintaining strong relationships
and trust with its stakeholders. As an Isle of Man registered company, we are not bound by the UK Companies Act 2006. However, we seek to
adhere to best practices and, as such, the following section outlines how the Directors take into account their obligations under section 172(1)
(a) to (f) of the Companies Act 2006.
Employees
Shareholders
Why we value them
Why we value them
We recognise our employees are fundamental to our success and,
as such, we put our colleagues at the heart of everything that we
do as a company. We strive to recognise and reward everyone’s
contributions appropriately and support our employees to ensure
motivation and give people the opportunity to develop both personally
and professionally. Playtech, therefore, needs to attract and retain
top talent and a strategic and professional approach to recruitment
is essential to achieve this.
Most pertinent issues in 2022
Continued access to capital is vital to the long-term success of our
business. Furthermore, Company Directors can better understand
shareholder concerns and the driving forces behind their voting
decisions. Engagement with experienced investors can be valuable
for the Company in providing feedback on key strategic decisions,
whilst also helping to anticipate any issues that may arise in areas
such as governance and sustainability.
Most pertinent issues in 2022
• Strategic priorities following unsuccessful acquisition of
•
Impact of the war in Ukraine on our colleagues and the community
Playtech plc
• Flexibility, autonomy and being able to work from home
• Employee wellbeing, work-life balance and career progression
• Diverse and inclusive workplace
• Competitive remuneration and benefits
• Communications about strategy and priorities
• Rising cost of living
How the Board and management engage and respond
In 2022, the Board and executive team took steps to strengthen the
quality and frequency of colleague engagement which will continue
into 2023. Specific methods of engagement include:
•
Employee engagement surveys
• Town halls and office visits – structured and informal format to:
• Understand and listen to ideas, issues and concerns
•
Increase awareness and understanding of the corporate strategy
and priorities
• Simplification of the Group including disposal of Finalto
• US and Latin America strategy
• Capturing the market opportunity in Italy
• Corporate governance
• ESG strategy and progress on safer gambling, climate and diversity
and inclusion
How the Board and management engage and respond
• Annual Report and AGM
• Structured programme of communications between Board
members and Investor Relations and existing and prospective
investors and analysts
• Results presentations and post-results engagement with major
shareholders
• Capital Markets Days
• Establish meaningful, two-way engagement with colleagues
• Board receives regular updates on investor relations
• Foster a culture of listening, openness and consultation
• Ensure employees are aware of actions as a result of engagement
•
•
Independent Speak Up mechanism allowing employees to raise issues
Qualitative and quantitative data and recommendations frequently
presented to the Board, Sustainability and Remuneration
Committees on employee turnover, engagement, reward
and benefits, talent development, and diversity and inclusion
Read more on pages 56 to 63
• Engagement with ESG indices
• Chair of the Remuneration Committee engages with shareholders
on Remuneration Policy and practice
Playtech plc Annual Report and Financial Statements 2022
43
Strategic Report Stakeholder engagement continued
Licensees and customers
Suppliers and technology partners
Why we value them
Why we value them
We seek to understand our licensees’ and customers’ needs and
challenges so that we can develop products and services and enter
strategic partnerships that will add value. Regularly engaging with
licensees and customers also highlights opportunities for innovation
to ensure we can stay ahead of the competition, and respond
to challenges.
Most pertinent issues in 2022
•
Innovation across content, products and platform
• Data protection
• Compliance
• Business and operational continuity during the Ukraine war
• Competitive pricing
• Service reliability and scalability
• Solutions and support to meet and anticipate regulatory
developments and sustainability topics – including safer gambling
How the Board and management engage and respond
• Face-to-face engagement at trade shows
• Executive Management team regularly meets with our customers
to ascertain how Playtech is delivering as a partner and how we
can improve
• The Board regularly receives updates on licences signed
and progress on implementations
Playtech’s Procurement function identifies key suppliers and
maintains partnership relationships to ensure its supply chain is
aligned with the Company’s core values and supports business
continuity. Our suppliers and technology partners play a crucial role
in supporting our operational excellence as well as the success of our
commercial teams, product units and, ultimately, our licensees. Our
customers benefit from high-quality provision of technical services
as well as the suppliers’ and partners’ geographic reach, industry-
specific and functional domain expertise and implementation support.
Most pertinent issues in 2022
• Complexity and speed of onboarding process for new suppliers
•
Impact of the pandemic on supply chain continuity and
timely delivery
• Consistent and regular communication and engagement
with key suppliers
• On-time payments
• Fair terms
• Ensure suppliers (including small suppliers) have access
to new business opportunities
• Ethical behaviour and supplier compliance with sustainability
criteria on climate and human rights
•
Innovation partnerships
How the Board and management engage and respond
• Management teams use account management structures and
CRM tools across our business to ensure we are delivering to
our licensees’ and customers’ expectations
• Presentations to the Board Sustainability Committee on
sustainable procurement risk assessment and sustainable
supply chain strategy
• We aim to apply best practices, develop skills and capabilities,
and deliver continuous improvement in execution to enhance
the overall customer experience
• The Procurement function undertakes actions to ensure open
communication with vendors and suppliers
• Playtech initiates supplier briefings and brainstorming sessions
to help create new solutions aligned with Playtech requirements
• Playtech ensures its suppliers comply with regulatory
requirements, through due diligence checks, GDPR reviews and
information security checks
• Playtech works with suppliers to ensure compliance with human
rights and climate requirements
• Despite disruption due to the Ukraine crisis, Playtech managed
to deliver hardware on time and meet project deadlines
•
The Board has directed Playtech to partner selectively with those
that are leaders in their own field and share Playtech’s standards
and values
44 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Regulators and policymakers
Society and communities
Why we value them
Why we value them
Engagement with regulators plays an important role in, and can be
valuable to, facilitating a fairer, safer and more sustainable sector.
The Company continues to actively advocate for regulation in existing,
future and evolving markets and recognises that one-on-one
engagements with regulators and policymakers are vital to raise
industry standards and better understand regulator concerns and
decision making. Through increased engagement with regulators
and policymakers, the Company is well positioned to achieve one of
its key commitments to share knowledge and have an even greater
influence on the regulatory environment and drive greater levels of
industry collaboration.
Most pertinent issues in 2022
• Developing effective regulations for new jurisdictions
We are committed to operating and growing our business in a way
that has a positive impact on the communities and environment where
we operate. We also recognise that the challenges facing the sector
and communities cannot be solved by one organisation alone. Driving
positive social change requires collaboration and partnership.
Most pertinent issues in 2022
• Societal concerns about the impact of gambling on digital wellbeing
and mental health
• Financial and in-kind investments in safer gambling research,
education and treatment
• Action to reduce the risks and impacts on climate change and nature
• Action to tackle modern slavery and human and labour rights issues
•
Improving existing regulations and compliance with a greater focus
on safer gambling and AML
• New regulatory and legislative developments to promote player
• Equality, diversity and inclusion
• The impacts of the war in Ukraine
and consumer protections
• Partnership, engagement and support for local community
• Monitoring AML compliance failings
•
Industry-wide changes to legislation to restrict advertising in new
and established jurisdictions
•
Implementing industry-wide safer game design
• Adequate industry contributions to charities providing research,
education and treatment
• Use of technology and data analytics to enable player protection
How the Board and management engage and respond
•
Board member participation in trade body and one-to-one
meetings with regulators and policymakers
• Chief Compliance Officer provides the Board with regular updates
on developments
•
The Board is engaged with the licensing processes in several
new jurisdictions to better understand regulatory requirements
• The Board continues to actively promote further regulation in the
US via meetings with state regulators
•
The Board receives ongoing updates including the review of the
UK Gambling Act and regulatory developments in the US and
Latin America
• Playtech delivers training to the Board every 12–18 months,
including legal requirements related to anti-money laundering
and anti-corruption, as well as regulatory developments
organisations and causes
How the Board and management engage and respond
• Engagement of the Sustainability and Public Policy Board
Committee along with the CEO with Playtech’s external
Stakeholder Advisory Panel to challenge and inform the
Company’s sustainability strategy
• The Board is provided with updates from the Chair of the
Sustainability Committee on a wide range of societal and
environmental topics including:
• The Company’s safer gambling strategy with a specific focus
on Playtech Protect, Playtech’s safer gambling technology
solutions offering
• Climate change
• Human rights
• The Board is provided with regular updates on community-related
efforts led by Playtech employees, such as the response to the
Ukraine war
• The Board participated in climate change training and endorsed
the Company’s climate change strategy
• The Board Sustainability and Public Policy Committee reviewed
and approved targets for increasing female representation in
leadership roles
See our response to Ukraine on pages 8 and 9
See KPI section on page 17
Playtech plc Annual Report and Financial Statements 2022
45
Strategic Report Responsible business and sustainability
Sustainable Success
The war in Ukraine, rising cost of living, economic downturn, continued impacts of climate change and lasting impacts of the pandemic on employee
working life and wellbeing, coupled with increased regulatory and disclosure requirements, have all had a profound influence on how a business responds
and manages societal and environmental impacts and opportunities. For the online gambling sector, there is a continued focus on the role that technology
can play in understanding and reducing risk as well as supporting a safer gambling experience. However, the growth of online gambling and increasing
regulatory developments continue to prompt debate and concerns about the impact of online gambling on the health and wellbeing of consumers.
All of these developments have influenced the Company’s decisions about its commitments and actions to grow in a responsible and sustainable way.
Sustainability framework, commitments and targets
Pioneering
safer gambling
solutions
Promoting integrity
and an inclusive
culture
Commitments
Commitments
• Expand the portfolio of safer gambling technology, tools
• Promote integrity, uphold human rights and reduce
and solutions
compliance risk across our operations and supply chain
• Harness investment in R&D to advance the next generation
• Ensure equal opportunity and equality for all employees
of safer solutions
• Strengthen operational safer gambling standards and
technology across our operations
Performance measures
• Engagement and collaboration with licensees
• Research and partnerships
• Safer gambling certification
• Support employee wellbeing
Targets and performance measures
•
Increase gender diversity amongst our leadership
population to 35% by 2025 against a 2021 baseline
• Supply chain risk assessment on human rights
• Employee engagement
Powering action
for positive
environmental impact
Partnering on shared
societal challenges
Commitments
Commitments
• Reduce greenhouse gas (GHG) emissions within own
• Help people live healthier online lives and adopt digital
operations and supply chain
resilience and safer gambling behaviours
• Build capability and climate resilience through decisive
actions in both own operations and supply chain
• Contribute to and support research, education and training
to prevent, reduce and address gambling-related harm
• Align to global climate efforts to transition into a low carbon
economy, in accordance with the latest climate science,
and prioritise climate innovation
Targets and performance measures
•
Increase employee participation in and contribution to
volunteering
Targets and performance measures
• Reach 415,000 people with digital wellbeing
• Reduce Scope 1 and 2 carbon footprint by 40% by 2025
programmes by 2025
against a 2018 baseline
• Engage 30,000 people in community and mental health
• Switch all offices, wherever possible, to renewable energy
programmes to improve livelihoods by 2025
• Secure approval of near-term and net zero targets by
• 5% year-on-year increase in employees’ contributions
Science Based Targets initiative (SBTi)
(skills, time or money) to the community, reaching a global
average of 10% by 2025
46
Playtech plc Annual Report and Financial Statements 2022
Strategic Report Group Sustainability Scorecard
Playtech uses a Group Sustainability Scorecard to assess performance against key non-financial metrics. In 2022, Playtech enhanced
the scorecard by revising the performance measures against each goal. The scorecard is designed to monitor, inform and assess progress
towards safer gambling, climate, diversity, wellbeing, supply chain and community investment goals.
Goals
1
Operational excellence
in safer gambling
2
Engagement on safer
gambling solutions
3
Low carbon business
4
Attracting and
retaining a
diverse workforce
5
Embedding
sustainability
and compliance
into supply chain
operations and
management
6
Ensuring transparent
spend and maximising
impact of community
investment
Commitment
Strengthen operational safer gambling
standards and technology across
our operations
KPI
Safer gambling independent
certification or assurance
2022 progress
GamCare B2B Safer Gambling Standard
G4 international certification of responsible
online gambling (Snaitech)
Safer gambling training delivery
to workforce
Customer Interactions (B2C) training
completion rate: 96%
Expand the portfolio of safer gambling
technology, tools and solutions
Brands deployed and integrated with
Playtech Protect solution, BetBuddy
13 brands in six jurisdictions
Harness investment in R&D to advance
the next generation of safer solutions
New policy and research (practical
and theoretical) papers
Publication of two research papers
Reduce greenhouse gas (GHG)
emissions within own operations
and supply chain
Reduce Scope 1 and 2 carbon
footprint by 40% by 2025 against a
2018 baseline
6,970 tCO2, absolute decrease by 11.7%
since 2021 and 39.6% since 2018 (baseline)
Build capability and climate resilience
through decisive actions in both own
operations and supply chain
Align to global climate efforts to transition
into a low carbon economy, in
accordance with the latest climate
science, and prioritise climate innovation
Ensure equal opportunity and equality
for all employees
Track Scope 3 reductions with focus
on key material categories
109,100 tCO2
Switch all offices, wherever possible,
to renewable energy
56.4% of energy consumption is from
renewable sources
Get near-term and net zero targets
approved by Science Based Targets
initiative (SBTi)
Submitted commitment letter to set
near-term and net zero targets for
approval by SBTi
Increase gender diversity amongst
our leadership population to 35%
by 2025 against a 2021 baseline
Reduction in gender pay gap and
gender bonus gap (UK)
Increased female representation amongst
leadership population to 26%
Mean gender pay gap: 27%
Median gender pay gap: 27%
Mean bonus gender pay gap: 41%
Median bonus gender pay gap: 37%
Rolled out >100 wellbeing initiatives and
3,400 employees participating in at least
one initiative
Support employee wellbeing
Employee participation in
wellbeing initiatives
Improvement of NPS from employee
engagement surveys
NPS: 54%
Promote integrity, uphold human rights
and reduce compliance risk across
our operations and supply chain
Reports raised through Playtech’s
Speak Up whistleblowing hotline and
incidents identified and resolved
Two incident reports raised and resolved
Completion of mandatory training
on compliance, data privacy and
cybersecurity, information security,
human rights and modern slavery
Empower charities, community groups
and social enterprises to deliver a
positive impact to local communities
Number of people engaged through
community investment and mental
health programmes
Help people live healthier online lives
and adopt digital resilience and safer
gambling behaviours
Number of people reached with the
healthy online living initiatives
Contribute to and support research,
education and training to prevent, reduce
and address gambling-related harm
Total amount invested
Training completion rates on:
Compliance: 94%
Data protection: 96%
Information security: 95%
Human rights: 96%
>70,000 people engaged1
1 Engaged is defined as an individual that has directly
benefited and/or has interacted with the programme
supported from financial and/or in-kind support.
>370,000 people reached2
2 Reached is defined as an individual that has directly
and indirectly benefited and/or interacted with
the programme.
> £1,010,000
Playtech plc Annual Report and Financial Statements 2022
47
Strategic Report Responsible business and sustainability continued
A message from the
Chair of the Committee
As a Non-executive Board member and Chair of the Board’s
Sustainability and Public Policy Committee, I am delighted to share the
progress and highlights of our sustainability performance for 2022.
This was the first full year that the Committee has been operational
and it held six meetings to review and monitor progress and challenge
the business to accelerate action across safer gambling, diversity
and inclusion, climate change, procurement and human rights. These
sessions enabled the Committee to better understand areas of
progress and the challenges ahead. The outcome of our meetings
included an endorsement of strategies to leverage technology to
advance safer gambling solutions, combat climate change, contribute
to a more inclusive business culture and support communities and
our workforce. The Committee is also working with the Remuneration
Committee and Executive Management to link ESG performance
to remuneration for Executives and selected leaders. Additionally,
the Committees are working with Executive Management to develop
a framework for embedding sustainability into performance
management across the Group.
Linda Marston-Weston
Chair of the Sustainability and
Public Policy Committee
23 March 2023
48 Playtech plc Annual Report and Financial Statements 2022
The below highlights our
progress in 2022
Safeguarding our people
With over 700 colleagues based in Ukraine, our key priority
remains the safety of our people. We continue to provide
essential support to our colleagues as well as humanitarian
support to communities across the country.
Strengthening governance
Alongside the CEO and executive team, the Committee
members have actively engaged with the external
Stakeholder Advisory Panel. This engagement has been
instrumental in helping us challenge ourselves to continuously
improve our strategy and consider future trends and
developments as well as understand how other companies
across sectors are tackling environmental, social and
governance considerations. During the year, the Company
also appointed a new Chief Sustainability and Corporate
Affairs Officer, who is a member of the Company’s Executive
Management Committee.
Enhancing our safer gambling technology
offering and partnerships
Through our Playtech Protect division, we continued
to enhance the technology and service offering for our
licensees, expand our research portfolio and our partnerships
to empower our licensees to enhance player protection
measures and raise industry standards.
Taking action to tackle climate change
The Company recognises that urgent action is required to
substantially reduce the risks and impacts of climate change
and, therefore, made a formal commitment to set near-term
and net zero science-based targets through the Science
Based Targets initiative (SBTi). 2022 also saw the Company
make significant progress in shifting to renewable energy
across the Group’s assets.
Advancing equality and inclusion
The Group has set out an ambition for equality in the
workplace and has begun to make progress on gender
diversity within its leadership population. In addition, we
have taken action to embed diversity as part of leadership
development and succession planning.
As we look to 2023 and beyond, our priorities will be to
continue to deliver against our commitments whilst also
focusing on how we can embed sustainability into our culture,
decision making and performance management.
Strategic Report Sustainability governance and oversight
Action and accountability
Playtech officially formed its Sustainability and Public Policy Board
Committee in 2021. Since then, the Committee has played an
important role in reviewing the implementation of the sustainability
strategy, recommending enhancements on measuring progress,
setting achievable targets and reviewing implementation and actions
to meet the Company’s commitments. The Committee also oversees
the Company’s key non-financial commitments, strategy, targets and
reporting from Board level.
In response to the evolving expectations regarding Board and
executive accountability on environmental, social and governance
performance, the Board has agreed to link executive remuneration
to year-on-year progress against the Company’s 2025 sustainability
commitments, effective from 2022 with an expansion to Executive
Management Committee and selected senior leaders in 2023. The
KPIs used to assess year-on-year performance cover safer gambling,
diversity and inclusion and climate change.
The day-to-day responsibility for sustainability governance sits
within the Sustainability and Corporate Affairs function. In practice,
this function co-ordinates action, provides subject matter expertise,
delivers support to other relevant functions, business units and
country management, manages and tracks performance, and leads
engagement and partnerships with external stakeholders. The team is
working closely with the Regulatory Affairs and Compliance function
to align and integrate compliance and regulatory considerations into
planning and decision making.
The Group’s governance processes are supported by the Internal
Audit and Risk function, providing assurance to the Board and
Executive Management team that effective systems and controls
are in place to manage significant risks within the business. The
Regulatory Affairs and Compliance function is subject to recurring
annual reviews, the scope of which is dynamic and varies from year
to year. Internal Audit also ensures that compliance-related areas are
integrated into other operational audits, as and when applicable, and
scrutinises the processes and data used to populate KPIs.
The Regulatory Affairs and Compliance function continued to lead the
Compliance Council and other internal governance forums. The key
objectives are to:
•
inform Playtech’s product teams, business units and projects of
current and evolving regulatory affairs and compliance topics;
• review and assess the impact of regulatory and compliance
developments;
• proactively engage on opportunities and shape debates on
regulatory affairs;
• discuss and co-ordinate regulatory and compliance positions; and
• share information and raise awareness of progress, challenges
and/or resource concerns that may impact Playtech’s compliance
and regulatory position.
During the year, the Board endorsed the Company’s commitment to
set near-term and net zero targets in line with climate science with the
Science Based Targets initiative (SBTi). The Company is developing
its roadmap and transition plan to meet these targets. During 2022,
the Board and members of the Executive Management have also
participated in climate change training.
The Board Sustainability and Public Policy Committee reviewed,
approved and monitor the Company’s diversity, equity and inclusion
strategy, including targets to increase female representation in
leadership roles. In December 2022, the Board approved a new Board
Diversity Policy outlining its commitment to ensure that diversity is a
key factor in the recruitment and succession planning at the Board
and executive levels.
Stakeholder engagement
In 2022, Playtech continued to challenge its approach to sustainability
and the way we do business through an external Stakeholder
Advisory Panel. The Panel was established in 2021 to help inform and
advance the strategy and raise standards for responsible business
practices within the gaming and betting sector. The Stakeholder
Advisory Panel has brought together external subject matter experts
and senior internal decision makers, including the Company’s CEO
and other relevant senior leaders. This forum complements Playtech’s
existing and regular stakeholder engagement mechanism. The Panel
discussed the Company’s approach to safer gambling, diversity,
equity and inclusion as well as climate change. During the course of
2022, the Panel’s insight, engagement and challenges provided an
invaluable perspective to help Playtech accelerate and mature its
approach going forward.
Key themes raised during the sessions included recommendations
for embedding sustainability into the Company’s purpose and
ambition, clarifying the business case for change and action,
harnessing employee engagement and insight, and leveraging
the Company’s role as a catalyst for greater collaboration in
the sector. Detailed summaries of the Panel meetings and
the actions that Playtech is taking forward can be found at
www.playtech.com/sustainable-success.
In 2023, Playtech intends to continue with a formalised external
engagement panel as part of its continued efforts to evolve and
inform its future sustainability strategy.
Playtech plc Annual Report and Financial Statements 2022
49
Strategic Report Responsible business and sustainability continued
Sustainability
materiality
In 2022, Playtech conducted a refresh of its materiality assessment to ensure that
the Company prioritises the environmental, social and governance issues that both
internal and external stakeholders consider to be important for Playtech, the industry
and society. The assessment was conducted by engaging internal and external
stakeholders, desktop research and analysis of evolving stakeholder expectations,
as well as regulatory and compliance developments.
Sustainability materiality matrix
This section outlines the material and emerging issues of interest to stakeholders, including topics that are related to wider community
investment activities and water usage within the Group’s Italian operations.
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c
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a
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r
o
p
m
I
Emerging
Water
security1
Circular
economy
Waste
management1
Systemic risk
management1
Biodiversity1
Remuneration
equity
Material
Safer gambling
Employee health & safety
Climate change
Corporate
governance
Data protection
and cybersecurity
DEI
Labour
standards1
Financial crime
Human rights1
Responsible advertising
& marketing
Strategic
Tax
transparency1
Lobbying & public
policy1
Community
investment
Board & executive
remuneration (linked to
ESG criteria)
Human capital
management1
Protection of
vulnerable groups1
Intellectual property
& disputes1
Responsible
supply chain1
High
Digital wellbeing
& resilience
Charity
partnerships1
Ethics of AI
Impact on Playtech
Pioneering safer gambling solutions
Promoting integrity and an inclusive culture
Powering action for positive environmental impact
Partnering on shared societal challenges
1 These refer to new issues recognised and considered following the updated materiality assessment.
50 Playtech plc Annual Report and Financial Statements 2022
Strategic Report
Issues that matter to Playtech and society
The Company recognises that standards, requirements and
expectations about the role of business in tackling environmental,
social and governance topics continue to evolve. Regularly assessing
which issues are material to the business and industries it operates in
is essential to successfully test and develop the Group’s responsible
business strategy and reporting. Playtech defines an issue as
being material if it is considered important by key stakeholders and
could have a significant financial impact on the business. As such,
the business considers both risks and opportunities as part of the
materiality assessments.
In 2022, we updated our Group’s materiality assessment by
conducting a refreshed systematic scan of the priority issues for
the betting and gaming and software and services sectors. We
reviewed the frameworks defined by investors and the wider financial
community, employees, licensees, gambling charities, regulators and
the media in order to conduct this analysis. We then grouped a long
list of issues into more meaningful clusters, which were prioritised
through a variety of exercises, including internal interviews.
The diagram below provides a visual overview of the material
concerns, segmented into strategic, material and emerging issues.
Strategic issues typically represent challenges that may not be on the
stakeholders’ radar yet but are instrumental in the Group’s planning
for the future. Emerging issues typically represent challenges that are
rising up on the stakeholders’ radar but are not yet instrumental in the
Group’s planning for the future. Four out of the five emerging issues
are challenges related to the environment, and thus we will monitor
and explore these within our new pillar, “Powering action for positive
environmental impact”, to assess how we can mitigate these risks
and reduce our impact on the environment.
While this may break with usual conventions around materiality
assessments, Playtech is a unique business, spanning both
the technology and gambling industry classifications for ESG
benchmarks. To that end, the Company has taken into account
material issues from both sectors in its materiality assessment.
The issues identified as being the most material are:
Safer gambling
Corporate governance
Embraces areas such as games design and product safety,
marketing, investment in research, education and treatment
(RET), customer engagement, regulation, data analytics
and the use of AI.
Refers to elements of governance that relate to the social and
environmental aspects of sustainability such as Board diversity
and experience, incentives and remuneration, as well as
integration of sustainability into decision making.
Climate change
Financial crime
Covers policies, existing and impending regulations, initiatives
and performance relating to climate change prevention, mitigation
and adaptation.
Diversity, equity and inclusion
Covers increased representation and inclusivity for various
groups, including gender, culture, identity and disability, directly
linked to talent attraction, retention, employee engagement,
training and development.
Responsible advertising and marketing1
Refers to adopting a socially responsible approach to advertising
and marketing, such as ensuring that adverts do not exploit the
susceptibilities of young or vulnerable people.
Employee health and safety
Relates to looking after the mental and physical health of
employees – a concern that has come further to the fore following
the pandemic.
Data protection and cybersecurity
Relates to policy, governance and resourcing as well as
operational KPIs related to security strategies, data protection
and security controls, vulnerability monitoring and risk
assessments and risk management as well as data governance.
Focuses on anti-money laundering (AML), anti-bribery and
corruption (ABC), tax evasion and professional integrity.
Human rights1
Focuses on recognising the rights of all people regardless of race,
sexuality, nationality or any other status. It also includes specific
reference to modern slavery.
Labour standards1
Relates to basic worker rights, working conditions, adequate
wages and job security.
Systemic risk management1
Refers to ensuring risks associated with business collapse
are managed, such as ensuring there is clear accountability
and reporting.
The approach to materiality is dynamic and will continue to evolve
and adapt, ensuring assessments help the business to capture
changes in the business and in society, as well as focusing on
reporting and ESG disclosures.
Playtech plc Annual Report and Financial Statements 2022
51
Strategic Report Responsible business and sustainability continued
Pioneering safer
gambling solutions
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.
Commitments
Pioneering safer gambling solutions has always been a
vital area for Playtech – and the sector it operates in – and
will only become more important in the years ahead as the
Company works to:
• Expand the portfolio of safer gambling technology, tools
and solutions
• Harness investment in R&D to advance the next generation
of safer solutions
• Strengthen operational safer gambling standards and
technology across our operations
Performance measures
Engagement and
collaboration
with licensees
Research and
partnerships
Safer gambling
certification
More information on methodology and KPIs at www.playtech.com
13Brands deployed
and integrated
with BetBuddy
6Number of
jurisdictions
11Compliance and
safer gambling
SaaS partnerships
Safer gambling – the changing landscape
and approach
Across all markets, including jurisdictions where online gambling
is newly and/or in the process of being regulated, the importance
of safer gambling continues to be the most material challenge and
concern for the gaming and betting sector. With its unique reach,
data capabilities and investments in safer gambling technologies, we
have taken the conscious decision to lead and pioneer technological
solutions to help our licensees improve safeguards as part of the
gambling experience for consumers. A key principle of the Company’s
approach has been collaboration. Playtech has partnered across its
operations and externally, with academics, non-profit organisations,
licensees and think tanks, to further develop and advance the delivery
of safer gambling solutions and standards as well as broaden its safer
gambling product portfolio under Playtech Protect. In 2022, Playtech
continued to integrate safer gambling technology and solutions as a
core part of its products and solution offerings to licensees.
Innovation and development of Playtech Protect –
Playtech’s safer gambling offering
Playtech Protect was established to offer licensees a wide range of
responsible gambling and compliance technology, tools and solutions
as well as its research partnerships. The solutions are embedded into
Playtech’s technology including Playtech’s Information Management
Solution (IMS) platform and Engagement Centre.
In 2022, we saw continued interest and uptake of safer gambling
technology tools and solutions by licensees. With more jurisdictions
introducing specific requirements on the use of behavioural analytics
to detect players at risk, Playtech expects an increase in demand
for technology solutions, identifying, engaging and reducing
gambling-related risk. During 2022, 13 brands were integrated with the
Playtech Protect solution, BetBuddy, compared to 8 brands in 2021.
By the end of 2022, Playtech Protect has expanded into three new
jurisdictions, having been adopted by clients in Germany, Portugal
and Switzerland. During the year, Playtech also continued the
development of its offering. The tools have been redeveloped on a
better performing cloud architecture to ensure the Company has the
bandwidth to scale the offering with operators and support a larger
customer base. Additional improvements include a wider range of
customised reports. To date, it is estimated that over 2 million players
have been monitored and risk assessed for responsible gambling
across 13 brands.
52 Playtech plc Annual Report and Financial Statements 2022
Strategic Report In addition to Playtech’s core offering under Playtech Protect, the
Company continues to maintain compliance and safer gambling
SaaS partnerships which play an important role to support more
licensees to compete, grow and thrive in the changing regulatory
landscape. These partnerships offer licensees a broader range of
quality technology solutions as well as making access easier via the
Playtech integration. One particular area of focus in mature markets,
such as the UK, is the role that technology solutions can play in
assessing the affordability of a player. Playtech continued to engage
with third-party providers to ensure it is well positioned to support
licensees with technology solutions to assess customer affordability
voluntarily as well as when regulatory regimes mandate affordability
checks. In 2022, Playtech increased its compliance and safer
gambling SaaS partnerships to 11 from 9 in 2021. These partnerships
play an important role in supporting more licensees to compete, grow
and thrive in the changing regulatory landscape, by giving them more
choices of best-in-class solutions and making access easier via the
Playtech integration.
The Playtech Engagement Centre offering can be used by
licensees to create bespoke safer gambling journeys, interact
with their players and provide information, or encourage them
to undertake a specific action. More information can be found at
www.playtech.com/playtech-protect. The Company has promoted
the use of Player Journeys as part of an operator’s safer gambling
strategy and provided training and demonstrations to licensees
throughout 2022.
In 2022, Playtech has continued to strengthen collaboration across
all its operations and business units to standardise its delivery of safer
gambling solutions to all its B2B and B2C brands. Playtech carried out
player engagement for operators in various markets in partnership
with the Playtech Managed Services (PTMS) division. PTMS
collaborates with Playtech Protect to inform how customer insights
can be used to improve interaction with at-risk players.
Collaboration with licensees
Playtech recognises that the key challenge ahead is to identify the
most meaningful metrics to measure player protection across the
industry. In 2022, Playtech launched a four-year research partnership
with Holland Casino, Erasmus University and the University of
Amsterdam. This partnership will explore how to measure player risk
and behavioural impacts from safer gambling interactions through
BetBuddy. It will develop a library of interventions which will be made
publicly available.
As Shimon Akad, COO, says: “We are investing in data analytics
and digital solutions to promote responsible gambling and deliver
solutions to reduce gambling-related harm. While there are already
tools to help customers gamble safely, we want to significantly
improve the effectiveness and use of these tools amongst
customers. We believe the best way to achieve this goal is to work
collaboratively with academic experts who can identify and evaluate
new approaches based on scientific theory. The goal of this research
collaboration is to develop a range of effective tools and interventions
that can be shared with all stakeholders and adopted by industry and
regulators globally.”
As Playtech’s strategic focus continues to expand to other markets
such as the US, Canada and Latin America, where individual states
and provinces are regulating online gambling for the first time, the
Company will use its experience in compliance and safer gambling
to support its licensees in those markets. This will ensure that the
opportunities that regulation creates are balanced with the need
to protect consumers.
Examining player protection
and responsible gambling
behaviours in Latin America
As part of Playtech’s aspiration to build greater
confidence in the benefits of regulation and find
solutions to advance responsible gambling, Playtech
commissioned a regional research and insights study in
2021 to examine player attitudes towards responsible
gambling. In 2022, Playtech commissioned research
for a second year. In a region where many countries
are discussing online gambling regulation, it is notable
that players have a positive view of rules and guidelines
on responsible gambling to help them stay safe. The
study, conducted in collaboration with a third-party
survey company (Toluna), explores the key issues
related to responsible gambling in the region. The study
surveyed consumer views on responsible gambling
across Argentina, Brazil, Chile, Colombia and Peru, and
examined aspects of responsible gambling, notably
player preferences when gambling, the acceptance
of protection messages along the playing journey,
perceptions of regulation, expectations of operators
and a view on how players perceive their behaviours.
“ We believe that gambling can
be an important and enjoyable
part of the leisure industry and,
more importantly, society. We
also believe that to ensure that
gaming benefits all stakeholders,
it is essential that the industry
leverages the technology and tools
available to put player protection
and trust at the heart of any
customer experience.”
Mor Weizer
CEO
Playtech plc Annual Report and Financial Statements 2022
53
Strategic Report Responsible business and sustainability continued
Safer gambling insights and solutions
Playtech has continued to expand its research programme portfolio
to cover a variety of topics, including Data Analytics, Product Safety,
Ethics and AI, and Digital Resilience. The programme builds on the
ongoing efforts to understand and address behavioural gambling risk
factors and convert those insights into player engagement. In 2022,
Playtech published two research reports as part of its collaboration
with the Responsible Gambling Council of Canada (RGC) and Demos,
a UK think tank. The reports generated insights about behavioural
features that are the strongest markers of harm and the effect of the
introduction of a stake limit for online slot games in Germany.
Playtech also presented two papers at the prestigious European
Association for the Study of Gambling (EASG) conference. The
RGC published two research papers as part of the ongoing
collaboration. The first was on Digital Wellbeing and Online Gambling,
and the second looked at the promising practices identified in
digital gambling tools that are designed to support users across
the player spectrum. All are available on Playtech’s website,
www.playtech.com/playtech-protect/research.
Safer gambling standards and certification
Playtech’s commitment to safer gambling solutions and the vital
importance it has for the business have been demonstrated by the
external recognition Playtech received year on year. In 2022, Playtech
initiated the GamCare B2C Safer Gambling Standard independent
assessment to add to the B2B Safer Gambling Standard that was
achieved in April 2021, www.safergamblingstandard.org.uk. Playtech
was the first company to receive the GamCare B2B Safer Gambling
Standard. GamCare is the UK’s leading provider of information,
advice and support for anyone affected by problem gambling.
The GamCare Safer Gambling Standard is an independent quality
standard, which assesses the quality of controls that companies put
in place to protect customers from experiencing gambling-related
harm. The accreditation process involved an in-depth review of
Playtech’s business, including governance, culture and executive
support for safer gambling, as well as safer game design and
product development.
The Snaitech Group is committed to implementing new initiatives
dedicated to responsible gaming and player protection. The Snaitech
division achieved the G4 international certification of responsible
online gambling in 2020, which remains valid until 2023.
Responsible gambling escalation to licensees – iPoker
Within the Poker network, iPoker employs its analytical skills to
identify possible money laundering, problem gambling and collusion
issues. Playtech’s dedicated team identifies potential issues and
escalates these to licensees to review and assess whether further
action should be taken. While Playtech is unable to take direct
action on behalf of licensees, as it does not have access to player
accounts, money or personal information, the team assists licensees
by escalating potential concerns about safer gambling, collusion and
anti-money laundering (AML).
The table below summarises the percentage of unique cases
escalated to licensees on AML, collusion and safer gambling over
the past three years. In 2022 several new licensees joined iPoker
and as result there was a significant increase in the number of
players and responsible gambling escalations. There was a drop
in the number of collusion escalations. This is predominantly due
to Playtech liaising with a specific licensee to strengthen security
of their sign-up process. There were a number of developments
in 2022, which included processes dedicated to the identification
of Real Time Assistance software and also advancements in the
Company’s existing prohibited software investigation methods.
Responsible gambling escalation to licensees – Live Casino
Playtech’s Live Casino operations continued to provide licensees
with information about player behaviour that could indicate players
at risk and/or displaying behaviour that could be harmful. Similar to
the iPoker team, the Live operation does not have access to player
accounts, money or personal information.
The Live team uses a machine learning application, which analyses
chat for words and phrases indicating potential at-risk behaviour. This
year, Playtech is reporting on safer gambling escalations to include
data from its Live Casino operations in Spain, Romania, Belgium,
Latvia, the US and Lima. In 2022, Playtech at-risk escalations from its
Live operations totalled 53,085 cases, compared to 23,802 in 2021
and 19,558 in 2020. This number has increased due to new products,
the launch of new tables, entering new markets and the continuous
upgrade of the chat analyser tool resulting in increased player
chat activities.
Escalations to licensees – iPoker
AML (%)
2022
2021
2020
Collusion (%)
2022
2021
2020
Responsible gambling (%)
2022
2021
2020
0.02
0.76
0.39
0.36
0.03
0.03
1.03
1.03
0.53
54 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Strengthening safer gambling in B2C operations
Throughout 2022, Playtech B2C operations initiated several projects
to continuously improve the quality and accuracy of Playtech’s
models to identify at-risk players as well as customer interaction
procedures. These projects included updates to its technology
infrastructure to strengthen the accuracy and use of near-real-time
identification of at-risk players. Additionally, the B2C operations
initiated over 100 actions to strengthen player identification and
engagement procedures. Major workstreams include development
of a new internal single customer view tool to assess player risk and
a new segmentation engine to enhance categorisation of gambling
risk categories using a combination of risk factors. The latter project
will enable Playtech to also strengthen its capability to direct players
towards specific player journeys based on this segmentation. The
UK B2C division has also introduced enhanced measures to improve
the efficacy of its control framework in managing regulatory risks
and will be further enhanced with the use of new risk management
software. These projects will be implemented during the course of
2023 and 2024.
Safer gambling performance – B2C
Proportion of customers self-excluding (%)1
Proportion of customers using RG tools (%)2
2022
13%
33%
2021
20203
10%
9%
32%
29%
1
Number of self-exclusions and registrations with GAMSTOP as a percentage of total unique
customers within Playtech’s B2C operations in the UK.
2 RG tools comprise reality checks, time-outs and deposit limits.
3 Transposition error in 2020.
Customer interactions
In 2022, the B2C Operations team engaged with customers on safer
gambling through several channels including 263,762 emails; 12,730
person-to-person interactions via phone, email or live chat; pop-up
messages; and customer clicks on SmartTips, the brand’s consumer
facing hub for tips and advice on safer gambling. Even though the
number of emails has reduced, the number of person-to-person
interactions has significantly increased, due to more targeted
customer interactions rather than providing all information to
all customers.
2022
2021
2020
Total number of emails sent
263,762
529,244
420,071
Total number of person-to-person
interactions (phone/email/live chat)
12,730
5,314
6,478
Playtech continues to monitor the number of self-exclusions and
use of responsible gambling tools within the UK B2C operations in
2022 as a proportion of the total unique customers. The proportion
of customers self-excluding increased by approximately 3% to
13% in 2022. This was due to the business being more active in
self-excluding customer accounts proactively. The number of
customers using responsible gambling tools has also risen since 2021
to 33% due to operations broadening the reach of players receiving
interactions and safer gambling information, focusing on targeted
communications. This increase is encouraging as it demonstrates that
the B2C operations’ responsible gambling communications strategy
may be persuading customers to adopt positive gambling behaviours.
Playtech plc Annual Report and Financial Statements 2022
55
Strategic Report Responsible business and sustainability continued
Promoting
integrity and an
inclusive culture
Playtech has refined its focus under this pillar on people, compliance,
culture and responsible supply chain commitments. Recognising the
importance of climate as a material issue, Playtech has created a new
standalone pillar that outlines its targets and ambition to decarbonise
and contribute to environmental protection.
Reducing compliance risk
Responsible business practices are not just the right thing to do – they
are critical to Playtech’s licence to operate, and to delivering long-term
commercial success. That is why Playtech continues to put ethical
principles at the heart of its business. In addition to its values, the business
has set out its ethical business principles as it seeks to make compliance
and ethical behaviour a core part of its culture. The following diagram
illustrates the key elements of Playtech’s Compliance Programme.
Taking action to reduce compliance and financial crime risk
Playtech conducts regular risk assessments in order to identify and
mitigate its compliance, ethical and regulatory risks, including money
laundering, bribery and corruption and tax evasion. Playtech has a
zero-tolerance policy for corruption and is committed to keeping
crime out of its operations.
This includes regular licensee and third-party risk assessment and
monitoring, including reviewing compliance risks across the lifecycle
of relationships supported by automated monitoring of entities and third
parties. The system monitors for historical and real-time considerations
such as PEP, sanctions, legal action, insolvency and disqualifications.
In addition, the Compliance and Regulatory Affairs function provides
input to the Group’s quarterly risk management process. This process
document is supported by a risk register, risk matrix, assessment guide,
interview schedule and Group risk management processes.
Each year, Playtech also conducts annual anti-money laundering risk
assessments. These assessments are based on industry standard
documents produced by the industry body Gambling Anti-Money
Laundering Group (GAMLG). The GAMLG methodology has been
adapted to reflect the particular risks associated with each part of
Playtech’s business. Once completed, the risk assessments are subject
to review and challenge by external legal counsel, and summaries of the
findings and progress are provided to regulators. The following illustrates
the different types of risk assessments conducted during the year.
Commitments
• Promote integrity, uphold human rights and reduce
compliance risk across our operations and supply chain
• Ensure equal opportunity and equality for all employees
• Support employee wellbeing
Targets and performance
measures
Employee
engagement
Supply chain
risk assessment
on human rights
Increase
gender diversity
amongst our
leadership
population to
35% by 2025
against a 2021
baseline
26%Female
74%Male
Amongst leadership population
56 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Risk assessment
External
engagement
and monitoring
Policies and
procedures
Governance
and oversight
Reducing
compliance risk
Communications
and engagement
Assurance,
evaluation and
reporting
Training
Application to
products, services
and operations
Policies
In 2022, Playtech reviewed its policies to align with evolving legislation
and industry best practice. This included updates to its anti-money
laundering, anti-bribery and corruption and business ethics policies
as well as its safer gambling and responsible advertising and
marketing policies.
Playtech communicates these policies to employees through a
number of channels including local communications to employees,
Playtech Home (Playtech’s intranet site), annual training, bespoke
training and the Company’s “The Way We Do Business” booklet, as
well as dedicated compliance emails and newsletters.
Training
Each year, Playtech deploys a wide range of training for employees
covering compliance topics including anti-money laundering,
anti-bribery and corruption, safer gambling, data protection and
anti-facilitation of tax evasion. All employees are required to
complete test-based e-learning training. In 2022, the Company
expanded the modern slavery and human rights training across all
employees. Playtech also deploys data protection and information
security awareness training modules. For more information on
cybersecurity and data protection, refer to the relevant sections. The
modules include a test to help the Company understand the levels of
understanding and awareness in Playtech’s workforce. Employees
who fail to complete the module will lose their eligibility for bonuses
within the financial year. Participation in core compliance, data
protection and information security training offered to employees
is available in the supplement. In 2022, the Company also provided
training to its B2C customer service team around meaningful
responsible gambling interactions, in the form of a workshop, where
participants were simulating real customer emotions. The workshop
was followed by a 20-minute one-on-one coaching session with
each participant during which they received feedback on their
interactions handling.
Playtech also delivers training to the Board every 12–18 months.
This includes briefings and legal requirements related to corporate
governance, sustainability, anti-money laundering and anti-corruption,
as well as regulatory developments. During 2022, the Board and
members of the Executive Management have also participated
in climate change training. The next Board training is planned
for H1 2023.
In 2022, Playtech continued with the excellence awards programme,
which included an “Engagement and Impact Champion” to recognise
employees helping to advance its sustainability strategy.
Training overview
The following outlines participation and completion rate in core compliance training offered to employees and leaders in the organisation.
Total number of eligible
Total number completing the training
Completion rate
Training type
Employees
Contractors
Employees
Contractors
Employees
Contractors
Compliance essentials1
Human rights
Customer interactions (B2C)
6,423
4,560
26
220
220
N/A
6,063
4,387
25
213
213
N/A
94%
96%
96%
97%
97%
N/A
1 Snaitech employees also completed training relating to Italian Legislative Decrees 231/01 and 231/07, in light of regulatory changes.
Playtech plc Annual Report and Financial Statements 2022
57
Strategic Report Responsible business and sustainability continued
Reducing compliance risk continued
Speaking up
An important aspect of Playtech’s commitment to conducting its
business with integrity and promoting a culture of openness and
accountability is providing a channel for employees to voice concerns
about anything they find unsafe, unethical or unlawful. The Company’s
Speak Up line is instrumental in ensuring that employees have
access to an independent channel to raise concerns confidentially
and without fear of criticism or retaliation. Since 2017, Playtech has
offered an independent Speak Up hotline to enable employees to
raise their concerns confidentially and anonymously. During 2022,
Playtech had two incident reports, anonymously submitted in writing
via the Speak Up platform. These incidents triggered the internal
review and escalation process to the Chief Compliance Officer
and General Counsel for review and have now been resolved.
Data protection
Playtech is committed to protecting and respecting the personal data
it holds, in accordance with the laws and regulations of the gaming
markets in which it operates. The Company’s systems, software,
technologies, controls, policies and processes have been adjusted
to ensure appropriate management of privacy risk. Personal data
processing is crucial to Playtech’s business model, with customers
and clients trusting the Company with their personal data every day.
Ultimately, they only trust Playtech as a business partner and supplier
when they have confidence that their personal data is safe and
understand how and why it is used by the Company.
Playtech’s Group-wide security and privacy policies support the
management of data privacy risk and are accessible to and applied
by all its global businesses units. Playtech provides transparency to
its players, employees and stakeholders on how it collects, uses and
manages their personal data and their associated rights.
Training overview
Following the implementation of the EU General Data Protection
Regulation (GDPR) in May 2018, and numerous regulatory
requirements for the gambling industry, Playtech has embedded
a tested and verified as well as robust and consistent approach to
data protection and security across all of its jurisdictions. Playtech
takes all possible steps to safeguard personal data by adhering to
the principles contained within the GDPR and other relevant data
protection legislation.
Playtech has established a dedicated Data Protection team that
reports monthly to the Board on data privacy risks and issues. The
Data Protection team’s work focuses on driving privacy by design and
monitoring of policies as well as conducting reviews and data privacy
impact assessments. The Group implemented procedures set out
clearly the actions required when dealing with a data privacy incident.
These include notifying regulators, clients or data subjects as required
under applicable privacy laws and regulations. Over the past year,
Playtech has matured the depth and frequency of data protection
and cybersecurity reporting to maintain high visibility for its senior
management team and the Board.
Playtech is proactive in refining its approach to data privacy.
Acknowledging the evolving regulatory and technological landscape
and changing customer habits and trends, the Company seeks
continuous improvement both in its policy and its application. All
Playtech employees and partners are required to comply with
confidentiality requirements, and legal and regulatory obligations,
with contractual terms such as data processing agreements and
EU model clause agreements governing the use, disclosure and
protection of information. Each year, employees and contractors are
also required to complete test-based data protection and security
awareness training.
The following outlines participation and completion rate in data protection and security training offered to employees and contractors in the organisation.
Training type
Data privacy and protection
Information security
Total number of eligible
Total number completing the training
Completion rate
Employees
Contractors
Employees
Contractors
Employees
Contractors
4,560
5,176
220
300
4,387
4,935
213
296
96%
95%
97%
99%
58 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Cyber and physical security
The Playtech Security team’s mission is providing business
enablement for the gaming platform, licensees and players in a
secure, non-intrusive and scalable manner. The global technological
environment is ever evolving, and so are cyber and physical security
threats. The gaming and betting industry is a highly lucrative target for
malicious parties, ranging from individuals operating by themselves to
highly sophisticated organised crime groups, which drives Playtech
Security to constantly strive for improved technologies, processes
and skills to address these challenges.
The Playtech Security team oversees the operational, technical and
organisational measures taken to protect the organisation from both
cyber and physical security risks. Domains such as infrastructure,
application, compliance and physical facilities are covered by a
comprehensive security programme, which assures the safe and
secure operation of Playtech’s business. The global Security team
has a strong customer-centric approach manifested by:
•
•
•
•
•
emphasis on securing customer data at rest and in transit;
educating licensees on the security capabilities of the
Playtech platform;
monitoring activities around production applications and infrastructure;
assuring suppliers and third parties undergo due diligence process
before integration with the Company’s infrastructure; and
performing ongoing security audits and tests to verify the security
controls in place.
Furthermore, the Playtech Security team feeds into the corporate risk
register and provides monthly updates to the Board about the security
programme, which includes:
• annual audit activities, in house and by licensees (ISO 27001, ISAE
3402, PCI-DSS, global regulations, etc.);
• network security architecture, automation and governance; and
• state-of-the-art protection of the Company’s devices from
malware, in-depth scanning of application code across
development teams to find security bugs and a 24/7 SOC team
which monitors the security incidents across the Company.
Compliance and responsible supply chain management
In 2022, Playtech initiated the review of its procurement policy to
strengthen oversight and mitigate compliance, ethical and climate-related
risks, to ensure minimum standards are adhered to when entering
joint ventures. Compliance continues to work closely with the
Procurement function to review risks in the supply chain. Supply chain
issues, including human rights and climate related, were specifically
examined as part of the compliance health check process and
risk assessment.
Human rights
Playtech is committed to upholding the principles embodied in the
Universal Declaration of Human Rights, as well as the International
Labour Organization’s Declaration on Fundamental Principles and
Rights at Work. Playtech’s most salient human and labour rights
issues relate to employment, data protection, procurement of goods
and services, and AML, specifically ensuring that individuals involved
in human trafficking and slavery are not laundering their money
through Playtech’s operations.
In 2022, Playtech published its sixth Modern Slavery Act statement,
outlining the initiatives the Company is undertaking to understand
and assess potential risks of modern slavery and human trafficking,
available at www.playtech.com.
Key areas of focus for 2022 included the reinforcement of processes
and procedures for managing third parties used in employment
practices, reviewing and strengthening audit procedures, and
strengthening supplier human rights assessments. In 2022, Playtech
enhanced its supplier risk profile to identify sectoral risks as well
as risks from their geographical location. A risk assessment matrix
was used, looking at sectoral risk, country risk and spend data to
prioritise next steps. The Company has reviewed 133 supplier sectoral
categories and has given a human rights and modern slavery risk
rating from “low” to “high” to each category. The Group has identified
57 “high” and “medium” categories as priority categories. To identify
country-specific risks, the Company took account of a number of
external indices in its process, including the UN Human Development
Index, Freedom House’s Freedom in the World Civil Liberties, the US
State Department’s Trafficking in Persons Report, the Global Slavery
Vulnerability Index and the World Bank Worldwide Governance
Indicators – Regulatory Quality, with the addition of the UNICEF
Child Rights Atlas – Workplace Index. In 2023, Playtech will engage
with its suppliers identified as being in a high-risk sector and located
in a high-risk country through a self-assessment questionnaire to
confirm that they continue to uphold the same standard as Playtech.
The Company will also continue an in-depth review of its internal
processes to ensure any gaps are identified and corrected.
In addition, Playtech’s Compliance team continues to monitor human
rights flags as part of its risk monitoring of third parties, including
suppliers, partners and licensees. The Company reviews any cases
involving human rights flags on a case-by-case basis to assess risk
and actions required.
Playtech plc Annual Report and Financial Statements 2022
59
Strategic Report Responsible business and sustainability continued
Equality in the workplace
Playtech aims to foster a respectful and supportive workplace that
enables every colleague to have the same opportunity regardless of
backgrounds, cultures, beliefs, genders and ethnicities, or any other
attributes. The Company has set out specific diversity commitments
and a target to increase female representation amongst its leadership
population, including Executive Management and senior management,
to 35% by 2025 against a 2021 baseline year, with an ultimate ambition
to achieve equality in the workplace.
At the core of Playtech’s diversity, equity, inclusion and belonging
strategy, the Company made the following commitments:
1. promote an inclusive culture across the organisation;
2.
3.
4.
build a more gender diverse workforce, increasing representation
of gender at all levels of the organisation and across all functions;
increase leadership representation of underrepresented
groups; and
adopt a data-driven approach to increase workforce diversity at
all levels of the organisation and across all functions.
Playtech’s strategy is formed to foster inclusion, improve gender
diversity and reduce the gender pay gap across our workforce.
The Board Sustainability and Public Policy Committee played and
will continue to play a key role in engaging with business leaders
on inclusion, challenging management to deliver against these
commitments and monitoring progress against the stated targets.
Playtech recognises that a diverse mixture of skills, professional
and industry backgrounds, geographical experience and expertise,
gender, tenure, demographics, disability, ethnicity and diversity of
thought is instrumental for the long-term success of the Company.
In 2022, the Board approved a Board Diversity Policy, setting out
its approach to ensure that diversity and inclusion is a core part
of recruitment and succession planning at the Board. To support
the implementation of the strategy, the Group has also deployed
a refreshed global recruitment policy as well as a new wellbeing,
bullying and harassment policy. The policies confirm Playtech’s
commitment to recruit from a diverse, qualified group of candidates,
thus increasing our diverse talent pool and broadening the Company’s
diversity of thought. In 2022, the FCA finalised new rules on board and
executive committee diversity disclosures. In 2023, we will be setting
targets on this and will report on the relevant ethnicity data.
In 2022, the Group also launched its first online unconscious bias
training, which had an 80% completion rate. This training remains
open for all employees, which can be accessed and completed in their
own time. Playtech also launched bullying and harassment training for
managers, which had a 75% completion rate.
Workforce engagement and development
It is important for the Group that its employees feel fulfilled, are
satisfied with their working environment and feel like they have
been given the right tools and guidance to develop their skills,
experience and career. During the year, Playtech launched its first
global mentorship programme, which aimed at matching mentors
and mentees based on the needs of each mentee. The programme
is designed to run for 12 months with a plan to continue a second
phase in 2023. The Company has set out its future focus to enhance
leadership development and embed diversity and inclusion as a core
part of the development programme for current and future leaders
and managers. To support this aspiration, in 2023 Playtech will also
launch a new Learning and Development policy and programme.
Championing diversity, equity
and inclusion in Estonia
In 2022, Playtech Estonia engaged its employees across
different initiatives to raise awareness around diversity,
equity and inclusion (DEI) and to foster an organisational
culture where every employee feels welcome and valued.
In May, Playtech Estonia celebrated Diversity Day in
collaboration with other local companies. All activities
were planned and organised by the local diversity
champions with the aim to make employees think more
about the value of having diverse teams and encouraging
openness. Employees participated in a gamified session
about nationalities and raised donations for the Estonian
Human Rights Center. Playtech Estonia also put together
an action plan for DEI-related activities for the next two
years, which was positively received by the Estonian
Human Rights Center. The plan includes the following
focus areas:
1.
2.
3.
raise awareness about the values of a
diverse workplace among our managers
and employees;
assure that the recruitment process is open for
all candidates and free from discrimination;
continue to support the career development of
youth in IT;
4. empower women in IT; and
5. maintain a family-friendly Company culture.
The Diversity Label for Playtech Estonia was extended
for an additional two years, and Playtech Estonia publicly
announced this in September.
60
Playtech plc Annual Report and Financial Statements 2022
Strategic Report Global gender splits: The following charts illustrate the global
diversity data and trends from 2020 to 2022.
Employees (%)1
2022
2021
2020
Senior managers (%)2
2022
2021
20203
Leadership population (%)4
Female (target: 35% by 2025)
2022
2021
Directors (%)5
2022
2021
2020
60.6
62.7
60.7
73.8
80.8
80.6
74.1
77.4
71.4
71.4
71.4
39.3
37.3
39.3
26.2
19.2
19.4
25.9
22.6
28.6
28.6
28.6
Male
Female
1
2
Employees are defined as the total number of employees on the payroll on 31 December.
Out of 7,160 employees, 7 preferred not to disclose their gender.
From 2021 onwards, senior managers are defined as the leadership population excluding any
Board members (e.g. CEO, CFO). In 2022, there are 195 senior managers in total.
3
In 2020, senior managers were defined as the top 500 highest earning employees at Playtech.
4
Leadership population is defined as Executive Management and senior management,
which includes managers with multiple departments or departments with complex and
more highly technical responsibilities.
5
Directors are defined as Board Directors on 31 December.
Direct reports to the Executive Committee (%)1, 2
2022
2021
2020
Executive Committee (%)2
2022
2021
2020
50.6
58.7
74.2
63.6
70.0
Male
Female
1 Excludes administrative support staff.
2 Data as at 31 October of the reporting year.
49.4
41.3
25.8
36.4
30.0
100.0
In 2022, the Company utilised a new element of the performance
management tool to measure employee engagement and satisfaction
across its global workforce. With this tool, Playtech is able to assess
its performance using a Net Promoter Score (NPS) approach, an
established metric for measuring satisfaction. In this first baseline
exercise, the Company received a 70% response rate on overall
engagement, with a score of 8.2 out of 10. Playtech had an NPS of
54% (“I would recommend Playtech as a great place to work”).
In the first survey, the highest rated categories were crisis handling
(i.e. the war in Ukraine), teamwork and manager support. Results from
the survey also highlighted opportunities for enhancement around
learning, development and professional growth and support for
employee wellbeing, as well as increased frequency and improved
quality of communications about strategy and priorities. This exercise
also enabled Playtech to understand employees’ position and views
on how the Company can champion and enhance diversity across the
Group. On the question of diversity, equity and inclusion, employees
felt that people from all backgrounds have equal opportunity to
succeed at Playtech with a score of 8.6 out of 10. Additionally,
employees felt that “Playtech does a good job at fostering a diverse
and inclusive environment” rating the Company with 8.3 out of 10.
However, Playtech recognises that there is more to be done to foster
equality across the business.
As a result of the survey, the Company is implementing a number of
workstreams to review the ideas and areas for improvement from the
survey, including establishing a Global Engagement Working Group
to identify wins that will have an immediate impact, the development
of business unit and country action plans to address concerns in the
medium to longer term and strengthening two-way communications
with its workforce.
Measuring progress on gender diversity
Playtech has conducted a systematic review to ensure it strengthens
its measurement and reporting methodologies and processes.
Playtech has implemented a new “business intelligence” (BI) tool
to monitor global human resources data, such as recruitment,
promotion, mobility, etc. This provides us greater flexibility to identify
opportunities for improvement and plan targeted actions to continue
to foster an inclusive culture with equal opportunities.
This data has been instrumental in implementing a programme of
improvements as we enhance diversity as part of recruitment and
selection, development and succession planning, with particular
focus on leader and manager recruitment processes. This led to
Playtech’s progress against our global target to reach 35% female
representation in leadership positions by 2025 reaching 26%,
compared to 23% in 2021. In 2023, Playtech will continue to use data
analytics to refine its understanding of gaps in female talent across
the Group and take action to increase female retention.
The FTSE Women Leaders Review, launched in 2016 as a follow up to
the Davies Review, is an independent review body which followed the
work of the Davies Review to increase the number of women on FTSE
350 boards. Although it started off as a voluntary independent review,
Playtech continued its participation in 2022, with the appointment
of one additional female on the Executive Committee. The metrics
reflect Playtech’s efforts to encourage the leadership to enhance our
processes and procedures within recruitment and internal mobility.
We continue to strengthen the rigour in performance management
processes, including efforts to ensure that remuneration and
promotion processes are fair and consistent. The key focus in 2023 is
to continue to collect and monitor our data in the UK and beyond, gain
local business unit and country accountability globally and enhance
the right behaviours in our leaders which in turn will promote a more
inclusive culture and workforce.
Playtech plc Annual Report and Financial Statements 2022
61
Strategic Report
Human capital metrics
In 2022, Playtech is reporting for the first time its global retention and
turnover rates as well as the total number of new hires, split by gender
and age groups.
Playtech has reported for the first time this year its global employee
retention rate and turnover figures. The Group’s retention rate has
remained over 65% over the last three years with 2020 having the
highest figure mainly due to the pandemic and the stability of the
employment market at that time (68% in 2022, 65% in 2021 and 77%
in 2020). The Company’s global turnover rate has increased slightly
from 28% in 2021 to 38% in 2022, which has been partly driven by
divestments in the year and an increase in the number of employees in
its Live studios. The table below shows the global retention and turnover
figures by gender and age groups, both of which were slightly higher
for women than men. In 2023, we will do a deep dive on those numbers
to understand how to improve them and strengthen the Group’s talent
retention strategy. Playtech’s continuing investment in human capital
and attractiveness of our employment proposition is evidenced by the
recruitment of 3,155 new hires (43% women and 57% men) in 2022.
Global employee retention rate
Male employees
Female employees
Under 30 years old
30–50 years old
Above 50 years old
Global employee turnover rate
Male employees
Female employees
Under 30 years old
30–50 years old
Above 50 years old
Total number of new hires
Male employees
Female employees
2022
68%
67%
70%
66%
88%
93%
38%
34%
45%
63%
23%
15%
3,155
57%
43%
Responsible business and sustainability continued
Measuring progress on gender diversity continued
UK gender pay gap data
One of the Group’s priorities is to review and reduce the gender pay
gap (GPG) with a focus on reducing the median gender pay gap,
which is the middle pay point for males and females. The Company
currently reports on the gender pay gap in the UK and will be looking
to conduct this exercise in other markets starting in 2023.
This year is the fifth anniversary of publishing UK GPG data for
Playtech. The data analysis and graphical representations indicate
a significant reduction of the median pay gap from 60.4% in 2018
to 26.5% in 2022. However, compared to last year, there has been
an increase from 18.9% in 2021 to 26.5% in 2022. When reviewing
the data for the relevant period, it is clear this is due to the number
of male leavers in lower paid positions. This is also reflected in the
bonus median pay gap figure. In addition, the Company continues
to see higher representation of men in the higher salaried roles, with
81% males and only 19% females in the upper quartile, although
this year there is a slight improvement compared to 2021 where the
split was 83% males and 17% females. The proportion of males and
females receiving a bonus has improved compared to the previous
year (65% males and 57% females in 2022 vs 81% males and 69%
females in 2021) following improvements to our internal processes
and policies to reduce any possible bias and discrimination. Playtech
acknowledges the gap remains and is committed to the necessary
focus on gender pay gap and continuing to promote a culture of
diversity and inclusion.
Gender pay gap1
Median gender pay gap (%)2
2022
26.5
2021
18.9
2020
21.0
Mean gender pay gap (%)2
2022
2021
27.4
27.5
2020
25.5
Median gender bonus gap (%)3
2022
36.5
2021
11.4
2020
31.1
Mean gender bonus gap (%)3
2022
2021
2020
41.4
44.7
49.6
Male
Female
1
2
3
Based on UK employees only. The numbers were calculated in line with the UK Government’s
requirements for reporting gender pay figures and cover payroll and bonuses paid up to
5 April 2020, 5 April 2021 and 5 April 2022 respectively.
Based on hourly rate of pay. In line with the UK Government’s guidance for gender pay
gap reporting, furloughed employees are excluded from the calculation.
Based on total bonuses received. In line with the UK Government’s guidance for gender pay
gap reporting, furloughed employees are included in the calculation.
62 Playtech plc Annual Report and Financial Statements 2022
Strategic Report
Health, safety and wellbeing
Economic footprint
Playtech is head quartered in the UK, where the Parent Company,
Playtech plc, is tax resident. Playtech engages in tax planning that
supports its business and reflects commercial and economic activity.
Playtech selects the location of its operations based on commercial
and operational factors that extend well beyond tax, including: the
prevailing regulatory environment available, a widely available pool
of technical talent, the linguistic capabilities in these jurisdictions, the
location of the Group’s licensees, and labour and operational cost
factors. The Group is committed to complying with all tax regulations
in jurisdictions in which it operates and seeks to minimise the risk
of uncertainty and disputes through proactive dialogue with the
tax authorities and by obtaining third party expert advice, where
appropriate.
Playtech has offices in 20 countries, with offices and commercial
activities in multiple jurisdictions, with the majority of its development
and technical operations in Ukraine, Estonia, Latvia, Bulgaria and
Gibraltar. These locations are well known as technology hubs with
a large population of highly skilled experts. The Group’s presence
in some markets, such as Austria, Australia and Italy, is a result of
acquisitions.
Given the dynamic nature of tax rules, guidance and tax authority
practice, the business is exposed to continuously evolving rules and
practices governing the taxation of e-commerce and betting and
gaming activities in countries in which the Group has a presence.
Such taxes may include corporate income tax, withholding taxes
and indirect taxes. The Head of Tax keeps the Board and Executive
Management fully informed of developments in domestic and
international tax laws within jurisdictions where the Group has a
presence. The Group has an appropriately qualified Tax team to
manage its tax affairs.
During the year, the Board reviewed and adopted the Group’s
UK Tax Strategy Statement (available at www.playtech.com/
responsibility-regulation/tax-strategy). The total adjusted tax charge
for 2022 is €54.9 million (2021: tax credit of €7.1 million) and the
effective tax rate for the current period is 25.5%.
The wellbeing of Playtech’s workforce and their families and
communities continues to be a key priority as they all continue to
deal with the ongoing impacts of the pandemic. During the year,
Playtech continued to prioritise workplace wellbeing and continued to
implement a flexible working model to support work/life balance and
flexibility for its employees, particularly those caring for friends and
family in these challenging times.
In 2022, Playtech continued to implement and scale its global
wellbeing framework with a focus on physical, mental, financial
and social wellbeing. We continued to cultivate a culture of support
for its employees, ensuring they have access to a suite of support,
advice and networking opportunities to help them be resilient, grow
and succeed at work. In 2022, Playtech rolled out more than 100
wellbeing initiatives with a focus on physical, mental, financial and
social wellbeing. Over 3,400 employees participated in one or more of
these sessions.
Line managers have played an instrumental role in supporting the
Group’s commitments to employee wellbeing. They have led efforts
to initiate and support team and individual wellbeing discussions
and build awareness to break down stigmas about mental health,
including discussions on gambling-related harm.
Snaitech operational health and safety
Snaitech’s business operations are unique within Playtech’s
operations. The Italian operations comprise retail shops and
racetracks, meaning the physical health and safety challenges are
different and more material as compared with an office environment.
Snaitech is committed to developing and promoting a culture of
worker health and safety and implementing a management system
to ensure full compliance with local Italian legislation.
The below table outlines occupational health and safety data for
Snaitech operations over the past three years.
Occupational health and safety data1
Total number of accidents
Accident ratio
Total number of accidents/working
hours x 200,0002
Number of days lost to accidents
Severity of accident index
Total days lost for accidents/
working hours x 200,0002
Number of days of absence3
1 Covers Snaitech operations only.
2022
8
1.1
224
2021
10
1.6
266
2020
4
0.7
88
31.9
10,747
41.3
6,836
14.8
40,131
2 200,000 is a fixed coefficient (50 working weeks x 40 hours x 100).
3
Number of days of absence in 2020 is defined as total hours of absence/8 (hours of work per
day); 31,942 days of absence are due to furloughed absences. Number of days of absence in
2021 is defined as hours lost due to illness, which includes COVID-19.
Playtech plc Annual Report and Financial Statements 2022
63
Strategic Report
Responsible business and sustainability continued
Powering action for
positive environmental
impact
In 2022, Playtech evolved its sustainability framework to include a new pillar that outlines its commitment to climate change. The Board and
leadership recognise that urgent action is required to substantially reduce the risks and impacts of climate change, that climate change is a material
issue and that the Company has an important role to play in the sector and the countries and communities where it operates. Additionally, the
Company is impacted by existing and potential future regulations to limit GHG emissions from the corporate sector and exposed to the impacts
that climate change can have on its operations, employees and customers. As a large company with significant B2B operations, Playtech has an
opportunity to scale action on climate through partnership and engagement with its value chain – from its customers to its suppliers.
Commitments
• Reduce greenhouse gas (GHG) emissions within own
operations and supply chain
• Build capability and climate resilience through decisive
actions in both own operations and supply chain
• Align to global climate efforts to transition into a low carbon
economy, in accordance with the latest climate science,
and prioritise climate innovation
Targets and
performance measures
Reduce Scope
1 and 2 carbon
footprint by
40% by 2025
against a 2018
baseline
Switch all
offices,
wherever
possible, to
renewable
energy
Secure approval
of near-term
and net zero
targets by
Science
Based Targets
initiative (SBTi)
6,970 tCO2
Scope 1 and 2 (location-based) emissions
39.6%
Reduction since 2018 (baseline)
64 Playtech plc Annual Report and Financial Statements 2022
Policy and commitments
Playtech’s Group environmental policy outlines the Company’s
commitment to reducing its environmental footprint as well as to
buying renewable energy and engaging suppliers to reduce its supply
chain emissions. In 2022, the Company circulated an environmental
procedure document to support the implementation of the policy
within its existing and new operations.
In 2022, one of the major areas of focus was to switch its material
operations to renewable energy, where possible. Another notable
area of progress is the Company’s formal commitment to set near-term
and net zero targets through the Science Based Targets initiative
(SBTi). Finally, the Company continued to improve its understanding
of its Scope 3 GHG emissions and its climate-related risks and
opportunities and started considering the levers it has to influence
those areas. The Board and members of the Executive Management
have also participated in climate change training during 2022.
Environment metrics
As per the UK SECR requirements for 2022, Playtech has reported
its Scope 1 and Scope 2 GHG emissions and energy consumption
figures for the UK.
In 2019 Playtech introduced a GHG emissions target to guide its
energy reduction efforts. The Company’s ambition is to reduce its
absolute Scope 1 and 2 GHG emissions by 40% by 2025, using 2018
as the baseline year. To make this happen, Playtech is working with
key site operations, supported by environmental specialists, to reduce
energy usage and address other environmental impacts. In addition,
Playtech has a central fund to support energy reduction projects.
Playtech’s total Scope 1 and 2 (location-based) emissions decreased
by 11.7% in 2022. Since 2018, they have decreased by 39.6%, meaning
that Playtech is very close to achieving its 40% reduction target. The
decrease in emissions is explained mainly by the decreasing emission
intensity of the electricity grids in the countries where the Company
operates, which averaged -14.1% (weighted by total electricity
consumption per country) in 2022. Normalised per full-time equivalent
(FTE) employees, emissions decreased by 12.5%. Total energy
consumption increased by 3.2% in 2022, explained by the continued
rebounding of activities following the COVID-19 pandemic.
Strategic Report During 2022, Playtech drove forward its transition to renewable
electricity in the key markets where the Company operates. This
has resulted in 56.4% of the Company’s total energy consumption
now coming from renewable sources, backed up by energy
attribute certificates, up from 10.8% in 2021. This has led to a
decrease of Playtech’s Scope 2 (market-based) emissions of
77.0% compared to 2021.
Playtech recognises the environmental impact across its global
value chain. The Company therefore conducts an annual Scope 3
footprint. In the process, the Group has followed the GHG protocol
guidance to calculate those emissions, based on a combination of
financial and actual supplier data. The Company is committed to
increasing engagement with key suppliers on their emissions and
gathering more actual data to continuously improve the accuracy of
Scope 3 figures in future years. Playtech determined which of the 15
categories listed by the GHG Protocol Corporate Value Chain (Scope
3) Standard are relevant to the Company and therefore should be
included in its Scope 3 footprint. 13 out of the 15 categories were
identified as being relevant to the Company and two were not relevant
for Playtech. All relevant categories have been calculated, although
“employee commuting” has only been calculated for Snaitech, which
represents around half of the Group’s total employees, due to data
availability. The Company aims to collect sufficient data to include a
full Group footprint on employee commuting in future reporting.
Playtech’s Scope 3 GHG emissions are over 90% of its total
carbon footprint and out of the 15 Scope 3 categories, the
Company’s top three material categories are “products and
services”, “capital goods” and “franchises”. Further details on the
methodology behind the environment metrics, such as emission
factors used, and the breakdown of Scope 3 GHG emissions
can be found in the Sustainability Reporting and Data section
at www.playtech.com/sustainable-success.
Environment metrics
Greenhouse gas emissions
Key performance indicator
Energy use
Global total energy consumption
UK total energy consumption
GHG emissions
Global Scope 1
UK Scope 1
Global Scope 2 (location-based)
UK Scope 2 (location-based)
Global Scope 2 (market-based)
UK Scope 2 (market-based)
Global Scope 3 4
Category 1: Purchased goods and services
Category 2: Capital goods
Category 3: Fuel and energy-related activities
Category 14: Franchises
Global total Scope 1 and 2
(location-based)
UK total Scope 1 and 2 (location-based)
Global total Scope 1 and 2 (market-based)
UK total Scope 1 and 2 (market-based)
Global Scope 1, 2 (location-based) and 3
Global Scope 1, 2 (market-based) and 3
Carbon intensity
Scope 1 and 2 (location-based) GHG intensity
Scope 1 and 2 (market-based) GHG intensity
Independent limited
assurance
Unit
2022
2021
2020
kWh
kWh
27,243,173 1, 2
1,733,605 1, 2
26,404,609
1,672,350
27,677,113
1,556,362
—
—
3
—
3
3
—
—
3
3
3
3
—
—
—
—
—
—
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
tonnes CO₂e
1,237 1, 2
67 1, 2
5,733 1, 2
274 1, 2
1,631 1, 2
77 1, 2
109,100
32,138
22,364
2,552
45,957
6,970
341
2,869
144
116,070
111,969
1.00
0.41
1,171
69
6,720
281
7,078
212
80,420
41,031
14,842
2,610
17,972
7,892
350
8,249
281
88,312
88,669
1.14
1.19
1,155
48
8,161
302
—
—
—
—
—
—
—
9,316
350
—
—
—
—
1.37
—
3 tonnes CO₂e/employee
— tonnes CO₂e/employee
1
2022 absolute data is an estimate based on 99.7% actual data coverage by headcount. Coverage has been above 99% for all three years.
2 Due to reporting timelines, data for November and December 2022 has been estimated using November and December 2021 actual data, except for sites where actual 2022 data was already
available. This is the same methodology that was applied for all three years.
3
Indicates data subject to independent limited assurance by PricewaterhouseCoopers LLP (PwC). The full assurance statement over 2022 data can be found at www.investors.playtech.com/
shareholder-information/sustainability-strategy-and-esg-reporting.aspx. The data for previous years, where assured, is detailed in the respective Annual Reports.
4 Detailed breakdown on the Scope 3 categories can be found in the Responsible Business and Sustainability Addendum to the Annual Report 2022.
Playtech plc Annual Report and Financial Statements 2022
65
Strategic Report Responsible business and sustainability continued
Responsible business and sustainability continued
Environment metrics continued
External assurance and benchmarking
The consumption of water across the Playtech Group decreased
by 16.1% in 2022. The racetracks saw a 22.7% increase in water
consumption because of the continued rebounding of activities
post pandemic.
Playtech continues to manage and report on a wider set of
environmental KPIs for Playtech’s Italian operations, Snaitech.
Snaitech runs a retail operation and three racetracks, which means
the environmental impact profile is different from the rest of the
Company’s markets. In 2022, Snaitech’s total non-hazardous waste
production decreased by 25.1%. The volume sent to landfill has
decreased to 5.69 tonnes compared to 7.44 tonnes in 2021. Even
though the volume that is reused or recycled also decreased by
25.1%, this is proportionate with the overall decrease. The volume of
hazardous waste also decreased by 30.3%. Of Snaitech’s total waste
production, 96.0% was produced by the racetracks. 99.9% of total
waste was reused or recycled.
Water consumption1
Total water consumption (m3)
Water consumption for watering
racetracks (m3)
Water consumption for watering
racetracks (% of total)
20222
20213
20204
578,150
688,707
611,629
230,871
188,150
167,831
39.9%
27.3%
27.4%
1 Data covering all of Playtech’s operations.
2 2022 estimate based on 78% actual data coverage by headcount.
3 2021 estimate based on 73% actual data coverage by headcount.
4 2020 estimate based on 84% actual data coverage by headcount.
Waste and effluent5
Total non-hazardous waste
production (tonnes)
Of which:
– Sent to landfill (tonnes)
– Reused or recycled (tonnes)
Hazardous waste (tonnes)
2022
2021
2020
5,288
7,056
7,665
6
5,2826
34
7
7,0487
49
5
7,660
66
5
6
7
Data covering Snaitech operations only.
This figure is split between racetracks (manure/by-product of animal origin – 4,292),
racetracks (other – 779), and offices (212).
This figure is split between racetracks (manure/by-product of animal origin – 6,946),
racetracks (other – 358) and offices (195).
To increase transparency around its climate change performance
and strategy, Playtech completed the CDP Climate Change 2022
Questionnaire and received a “B” rating, maintaining the rating
achieved in 2021 under strengthened scoring criteria. The Company
intends to continue improving its rating in future years. Playtech has
embraced the recommendations of the TCFD, a framework that
allows it to report consistently on the opportunities and challenges
presented by climate change and provide information on how these
might impact strategy and financial performance. Our approach in
this area is evolving in line with developing best practice. Playtech’s
2022 GHG reporting (Scope 1 emissions, Scope 2 (location-based)
emissions, Scope 2 (market-based) emissions, Scope 1 and 2
intensity per FTE employee and Scope 3 emissions, categories 1, 2, 3
and 14) have been subject to independent limited assurance by PwC.
We engaged PricewaterhouseCoopers LLP (PwC) to undertake a
limited assurance engagement, reporting to Playtech plc only, using
International Standard on Assurance Engagements (ISAE) 3000
(Revised) Assurance Engagements Other Than Audits or Reviews
of Historical Financial Information and ISAE 3410: ‘Assurance
Engagements on Greenhouse Gas Statements over Playtech’s
2022 GHG reporting (Scope 1 emissions, Scope 2 (location-based)
emissions, Scope 2 (market-based) emissions, Scope 1 and 2
intensity per FTE employee and Scope 3 emissions, categories 1, 2,
3 and 14). For more details, please refer to the “Environment metrics”
table on page 65.
PwC has provided an unqualified opinion in relation to the relevant
KPIs and data and its full assurance opinion is available on the
Playtech website, http://www.investors.playtech.com/shareholder-
information/sustainability-strategy-and-esg-reporting.aspx.
Non-financial performance information, including greenhouse gas
quantification in particular, is subject to more inherent limitations
than financial information. It is important to read the selected GHG
information contained in this Annual Report in the context of PwC’s
full limited assurance opinion and the reporting criteria found in the
Responsible Business and Sustainability Addendum to the Annual
Report 2022, which are also available on the Playtech website,
https://www.playtech.com/sustainable-success.
Engaging colleagues to reduce our
environmental footprint
In 2022, Playtech continued and expanded its cross-functional
Environment Forum chaired by the Head of Sustainability. The
forum meets quarterly and its remit includes the development and
maintenance of an environmental policy for the Group (available
at https://www.playtech.com/sustainable-success) as well as
setting, co-ordinating and overseeing the strategy and response
to the challenges posed by climate change. The policy sets out the
commitment to sourcing renewable energy and engaging suppliers to
reduce Playtech’s supply chain emissions. Its work on climate change
includes reviewing the current GHG targets and strategy to ensure
it aligns with the latest science on limiting the level of global warming
below 1.5°C and evolving regulatory and reporting frameworks. In
2022, this forum along with selected senior management participated
in a series of refreshed climate scenario workshops to identify new
and provide an update on existing short, medium and long-term
climate-related risks and opportunities, which can have a material
impact on the business, running climate change scenarios and
building risk management strategies across its key markets and
operations. This was done in line with the Task Force on Climate-
related Financial Disclosures (TCFD) framework (see TCFD table).
66 Playtech plc Annual Report and Financial Statements 2022
Strategic Report
TCFD statement
This section sets out Playtech’s climate-related financial disclosures, current approach and future plans, consistent with all of the Task
Force on Climate-related Financial Disclosures (TCFD) recommended disclosures, in compliance with The Financial Conduct Authority
(FCA) Listing Rule 9.8.6R(8). In the following statement, we outline our compliance with all the elements of the TCFD, including the four
TCFD recommendations and the 11 recommended disclosures. For Strategy disclosure (b), Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy, and financial planning, Playtech has not yet been able to quantify the impact of all
identified risks and opportunities. The Company will continue to work on quantifying those risks and opportunities in future years.
TCFD element
TCFD disclosure
Current approach
Future plans
Read more
The full Board will
receive further training
on climate change in
2023 that will provide
information on the latest
climate science and how
the public policy agenda
is developing in this area.
Sustainable
Success
Governance
Structure (page 49)
Training (page 57)
Continue to review and,
if necessary, adapt the
Group’s governance
process to ensure
alignment with emerging
good practice.
Governance
a) Describe the Board’s
oversight of climate-
related risks and
opportunities.
In 2021, Playtech’s Board of Directors officially formed a
Sustainability and Public Policy Board Committee with the first
meeting in November 2021. Since then, this Committee sets the
agenda and monitors the implementation of the responsible
business and sustainability strategy.
The Sustainability and Public Policy Committee of the Board has
responsibility for overseeing sustainability – including climate-
related matters – and reviewing the strategies, policies and
performance of the Playtech Group. In 2022, the Committee
held six meetings and considers the climate change aspects of
business plans, internal resourcing, expansion and disposal of
activities and capital expenditure. Oversight of climate-related
risks, opportunities and strategy sits with this Committee. This
Committee will continue to meet quarterly and review climate-
related issues as part of the standing agenda. The Chair of the
Committee serves as the Board-level champion on these topics
and reports to the Board on climate-related issues annually.
The Risk & Compliance Board Committee also reports to the
Board on climate-related issues annually.
The frequency with which the full Board considers climate-related
risks and opportunities was agreed in 2022 with these matters now
discussed biannually.
Each member of the Sustainability and Public Policy Committee
received training covering ESG and regulatory developments
(page 57). In 2022, the Board participated in a detailed climate
tutorial covering the physical science basis and regulatory, investor
and corporate trends, delivered by external advisers specialised in
sustainability.
During the year, the Company appointed a new Chief Sustainability and
Corporate Affairs Officer, who is a member of the Company’s Executive
Management Committee and attends the Sustainability and Public
Policy Board Committee. The Sustainability function sits within the
Corporate Affairs and Sustainability function and holds the day-to-day
responsibility and oversight of regulatory compliance and responsible
business, along with the Regulatory Affairs and Compliance function.
The Chief Compliance Officer is also a member of the Executive
Management Committee and attends the Risk & Compliance as well
as Sustainability and Public Policy Board Committees.
Playtech has a cross-functional Environment Forum which is
chaired by the Head of Sustainability, who reports to the Chief
Sustainability and Corporate Affairs Officer. This Forum is
attended by senior representatives from Audit/Risk; the Chief
Operating Officer’s office; infrastructure and technology; Investor
Relations; procurement; site operations; and other functions. It
meets quarterly, to:
• develop, review and update as necessary Playtech’s climate
policies and targets;
•
•
identify climate risks and opportunities and develop risk
management strategies;
review and define actions to comply with evolving
regulatory reporting requirements and voluntary reporting
frameworks; and
• allocate the annual environmental budget.
b) Describe
management’s role in
assessing and managing
climate-related risks and
opportunities.
Playtech plc Annual Report and Financial Statements 2022
67
Strategic Report
Responsible business and sustainability continued
TCFD statement continued
TCFD element
TCFD disclosure
Current approach
Future plans
Read more
Strategy
a) Describe the
climate-related risks
and opportunities
the organisation has
identified over the short,
medium and long term.
Playtech has identified various climate-related risks and
opportunities following the scenario analysis exercise that was
completed in 2021 and updated in 2022. Please see Table A:
Climate scenarios and sources and Table B: Climate-related risks
and opportunities for more detail.
Playtech plans
to undertake a
further scenario
exercise in 2024.
b) Describe the impact
of climate-related risks
and opportunities
on the organisation’s
businesses, strategy
and financial planning.
Playtech has identified various climate-related risks and
opportunities and quantified their impact where possible, following
the scenario analysis exercise that was completed in 2021 and
updated in 2022. Please see Table A: Climate scenarios and
sources and Table B: Climate-related risks and opportunities for
more detail.
c) Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.
Playtech has identified various climate-related risks and
opportunities following the scenario analysis exercise that was
completed in 2021 and updated in 2022. Please see Table A:
Climate scenarios and sources and Table B: Climate-related risks
and opportunities for more detail on the resilience of Playtech’s
business strategy and management approach for each identified
risk or opportunity.
Continue to monitor
external tools and the
latest climate science
to assess the physical
and transition risks
associated with climate
change. Continue to
report on how this has
guided our strategy in
future reports.
Scenario analysis
and climate-related
risks and
opportunities
(pages 70-73)
Risk management,
principal risks
and uncertainties’
(pages 85-90)
Risk
Management
a) Describe the
organisation’s processes
for identifying and
assessing climate-
related risks.
The Board is responsible for determining the nature and extent of the
significant risks it is willing to accept in achieving its long-term strategic
objectives. Through its role in monitoring the ongoing risks across the
business, the Risk & Compliance Committee advises the Board on
current and future risk strategies. The primary responsibilities delegated
to, and discharged by, the Risk & Compliance Committee include:
Scenario analysis
and climate-related
risks and opportunities
(pages 70-73)
•
reviewing management’s identification and mitigation of key
risks to the achievement of the Company’s objectives;
• monitoring incidents and remedial activity;
• agreeing and monitoring the risk assessment programme
including, in particular, changes to the regulation of online
gambling and the assessment of licensees’ suitability;
•
reviewing and assessing climate-related risks in the context
of Group-wide risk;
• agreeing on behalf of the Board and continually reviewing the
risk management strategy and relevant policies for the Group;
• satisfying itself and reporting to the Board that the structures,
processes and responsibilities for identifying and managing
risks are adequate; and
• monitoring and procuring ongoing compliance with the
conditions of the regulatory licences held by the Group.
Climate-related risks are identified through various channels
including quarterly Environment Forum meetings and the climate
scenario analysis exercise completed in 2021 and updated
in 2022. Presentations for these meetings include reviews
of current national climate policies in the key markets where
Playtech operates. The identified risks are assessed by the
Head of Sustainability with support from external sustainability
advisers and the relevant functions within Playtech. The Head
of Sustainability is responsible for updating the Group Internal
Audit and Risk function on climate-related risks, which includes
a description of the risk, risk categorisation, type, impact and
likelihood, mitigation and validity. This information is approved by
the Company’s Director of Internal Audit and Risk.
All types of climate-related risks and opportunities are considered
through the above process, including transition risks (policy
and legal, technology, market, reputation); physical risks (acute,
chronic); and opportunities (resource efficiency, energy source,
products/services, markets, resilience).
68 Playtech plc Annual Report and Financial Statements 2022
Strategic Report TCFD element
TCFD disclosure
Current approach
Future plans
Read more
Risk
Management
continued
b) Describe the
organisation’s processes
for managing climate-
related risks.
c) Describe how
processes for identifying,
assessing and managing
climate-related risks
are integrated into the
organisation’s overall risk
management.
The Head of Sustainability is responsible for co-ordinating the
management of climate-related risks across Playtech’s business.
This includes setting the Company’s climate strategy, which
includes its GHG reduction targets; Environment Policy; collecting
and analysing environmental data to identify hotspots; defining and
agreeing reduction plans; and engaging country leadership teams
and key asset managers.
Playtech began assessing climate-related risks and opportunities
specifically in 2020 and completed its first scenario analysis
in 2021. In 2022, the Company adopted a more systematic
approach to reviewing, updating and monitoring climate risks as
governance and management processes were further embedded
and matured. The Company’s focus was also on shifting sites to
renewable electricity where possible and starting to engage with
the Company’s Procurement function, including through a climate
change due diligence questionnaire for new suppliers. Additionally,
the Company incorporated climate change into its consideration of
risk and viability for the business as a whole.
Climate-related risks are considered as part of the overall risk
process. The Group Internal Audit and Risk function collects
information on risks from stakeholders across the business, which
is then presented to the Group Risk Management Committee
(Executive Management Committee) and Board Risk &
Compliance Committee (Board Committee).
Climate-related risks are monitored as part of the sustainability
strategy and Compliance and Regulatory Affairs risk processes.
The Sustainability and Public Policy Committee of the Board feeds
into the identification, assessment and management of climate-
related risks, which are integrated into the Group risk process by
the Head of Sustainability.
Metrics
and Targets
a) Disclose the
metrics used by the
organisation to assess
climate-related risks
and opportunities in line
with its strategy and risk
management process.
In 2021, Playtech has started to quantify the financial impact of
climate-related risks. Please see Table A: Climate scenarios and
sources and Table B: Climate-related risks and opportunities for
more detail.
In 2022, Playtech strengthened the methodology and approach
around quantification of climate-related risks and broadened the
number of quantified risks and opportunities. This has provided the
Company with a clearer understanding of the nature and scale of
the challenges it faces.
Risk management,
principal risks and
uncertainties’
(pages 85-90)
Scenario analysis
and climate-related
risks and opportunities
(pages 70-73)
We will continue to
refine our approach
to quantification of
climate risk. We will also
look to develop a suite
of indicators that will
provide the Board and
senior management
with a view of how those
risks impact the delivery
of our strategy over
the short, medium and
long term.
Scope 1, 2 and 3
emissions (page 65)
b) Disclose Scope
1, Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the
related risks.
c) Describe the
targets used by the
organisation to manage
climate-related risks
and opportunities
and performance
against targets.
Playtech has disclosed its Scope 1 and 2 (location-based)
emissions annually in the environment section of the Annual
Report and to CDP. The Company started disclosing Scope
2 (market-based) and Scope 3 emissions in 2021. Playtech
continues to disclose this information in this report.
Playtech has set a target to reduce its absolute Scope 1 and 2
GHG emissions by 40% by 2025 from a 2018 baseline. Progress is
monitored annually as part of the year-end non-financial reporting
process and captured as one of the seven areas of performance in
the Board Sustainability Scorecard.
In 2023, Playtech will
submit its near-term
and net zero targets to
the SBTi for external
validation.
Group scorecard
(page 47)
In 2021, Playtech carried out its first Scope 3 footprint and
calculated market-based Scope 2 emissions, which were
prerequisites for setting a science-based target (SBT) – that
is, an emissions reduction target that aligns with the latest
climate science.
In 2022, Playtech publicly committed to setting a near-term
(emissions reduction) and long-term (net zero) SBT, to be validated
by the SBTi.
Playtech plc Annual Report and Financial Statements 2022
69
Strategic Report Responsible business and sustainability continued
Responsible business and sustainability continued
Scenario analysis and climate-related risks and opportunities
In 2022, Playtech conducted its second scenario analysis, building on the extensive scenario analysis conducted in 2021. The scenarios used
in 2021 were updated based on the latest information from the Intergovernmental Panel on Climate Change (IPCC) and International Energy
Agency (IEA). Three workshops were held with subject matter experts from across the different business units and countries where Playtech
operates to consider the outcomes from the 2021 analysis and identify any changes. The Company was again supported by Carnstone, a
management consultancy specialised in sustainability and ESG. Playtech’s scenarios and the external scenarios that fed into Playtech’s
scenarios are summarised in Table A: Climate scenarios and sourcesand comply with the TCFD guidelines to use a range of scenarios that
provide a reasonable diversity of potential future climate states, including a 2°C scenario or lower. They draw on the IPCC’s Representative
Concentration Pathways (RCPs) and Shared Socioeconomic Pathways (SSPs); IEA’s World Energy Outlook scenarios; and the Principles for
Responsible Investment’s (PRI) Inevitable Policy Response (IPR) scenarios.
Because scenarios are models of the future and not precise predictions, the scenarios refer to global warming outcomes and the path towards
those outcomes on a decadal level. The scenarios use a mix of qualitative and quantitative information and were applied through three lenses:
operations (key markets and assets); supply chain; and customers and consumers. As Playtech is a global company with assets in 20 markets,
the scenarios considered both global climate impacts as well as specific local impacts in its key markets.
1.5°C Scenario
2°C Scenario
3°C Scenario
s
o
i
r
a
n
e
c
s
s
h
c
e
t
y
a
P
l
’
Summary:
physical
aspects
Increase in heatwaves, extreme weather
events (precipitation, droughts, storms),
floods, species extinctions and wildfires
over current conditions, but slow and
broadly manageable across most
geographies.
Increase in heatwaves, extreme
weather events and wildfires which
reach unmanageable levels in some
geographies by the 2040s. Water
availability for agriculture, hydropower and
human settlements severely diminished
from the 2040s. High flood damages.
Significant adaptation necessary and
frequent disruption expected.
Summary:
transition
aspects
Significant, rapid and disruptive policy
change across carbon pricing, energy,
transport, buildings and deforestation.
Rapid phase out of fossil fuels in the
2030s and 2040s. Every policy decision
has a climate angle. Global GHG
emissions peak by 2025 and reach
net zero by the early 2050s.
New policies are implemented over
current levels, in a slow and inconsistent
manner. Carbon prices and other limits on
emissions are implemented, but the cost
of emitting grows in a slow and steady
manner. The electrification of transport
and buildings does not pick up much pace.
Global GHG emissions peak in the 2020s
and reach net zero in the 2070s.
Various areas of the world become
uninhabitable due to intense heatwaves,
droughts or combinations of both. Heavy
precipitation events and longer and more
intense wildfire seasons covering more
areas of the globe lead to a constant
state of disruption. Floods cause
widespread disruption, including to coastal
infrastructure such as ports. Species
extinctions and severe water shortages
prevent the production of key commodities
including foods. By 2100, sea level rise
is becoming a problem for low-lying
coastal areas.
Climate policies are maintained at current
levels, with major economies reducing
emissions gradually over the next 30 years
and reach net zero around 2050. New
technologies are not deployed as fast as
predicted and the world remains reliant on
fossil fuels with widespread use of carbon
capture and storage (CCS) by the second
half of the century. Globally, GHG emissions
continue to rise.
IPCC
scenarios
IEA
scenarios
Other
scenarios
Other data
sources
s
o
i
r
a
n
e
c
s
l
a
n
r
e
t
x
E
RCP2.6/SSP1
RCP4.5/SSP2
RCP6.0/SSP5
Sustainable development
New policies
Current policies
PRI IPR: 1.5C Required Policy Scenario
PRI IPR: Forecast Policy Scenario
Climate Analytics, Climate Impact Explorer; Climate Interactive, EN-ROADS Climate Change Solutions Simulator; Network for
Greening the Financial System, Climate Scenarios Phase 2; World Bank, Climate Knowledge Portal; World Resources Institute,
Aqueduct Water Risk Atlas.
Table A: Climate scenarios and sources.
Climate-related risks are regularly monitored by the executive cross-functional Environment Forum, the Sustainability and Public Policy
Committee of the Board, as well as the Risk & Compliance Committee of the Board. They are also considered as part of the Risk & Compliance
Committee’s biannual review of risks across the Group. Playtech routinely monitors the status of climate regulation in its key markets to ensure
that its GHG reduction targets keep pace with regulatory changes.
The risks and opportunities that were identified as part of the climate scenario analysis are summarised in the below table. The Company
defines short term as less than one year; medium term as one to five years; and long term as more than five years. The Group defines the impact
as material when it is larger than the Group materiality as set out in the Independent Auditor’s Report on pages 136-137. The Company attempted
to calculate the financial impact of each risk and opportunity. For some, however, this was not yet possible due to a lack of data. Playtech will aim
to increase the number of risks and opportunities for which impacts are quantified, year on year as more data becomes available. For the risks
and opportunities where the financial impact was determined and quantified, it was calculated based on a combination of projections on the
physical impacts of climate on specific locations, projections on the societal responses to certain future climate states, both from reputable data
sources described in the table Table A: Climate scenarios and sources and information gathered from within the business.
70 Playtech plc Annual Report and Financial Statements 2022
Strategic Report
Physical risks
Category
Type
Description
Acute
Risk
Cancellation of sports events due to high
temperatures or extreme weather events.
Likelihood: very likely.
Timeframe: medium and long term.
Impact: loss of revenue and/or higher
operating costs.
Applicable
scenario(s)
Materiality
Management approach
1.5°C
Immaterial. Move to night time events, which would
2°C
3°C
Immaterial.
Immaterial.
result in higher operating costs due to
the necessary lighting. Invest in the most
energy-efficient lighting available and/or
on-site renewables. Renew racetracks
with more resilient all-weather surfaces.
Acute
Risk
Water stress causing disruption to horse racetracks
and third-party data centres.
2°C
Not yet
quantified.
Likelihood: very likely.
Timeframe: medium and long term.
Impact: higher operating costs, temporary
disruption to operations.
Chronic
Risk
Higher energy costs to cool buildings, including
third-party data centres, Live studios and offices
due to higher temperatures.
Likelihood: very likely.
Timeframe: short, medium and long term.
Impact: higher operating costs.
Acute
Risk
Reduced employee productivity and ability to
commute during heatwaves.
Likelihood: unlikely.
Timeframe: medium and long term.
Impact: disruption to operations and higher
operating costs.
Acute
Risk
Disruption to supply chains of key IT equipment
due to extreme weather events. Force majeure
clauses being used more, making it more difficult to
be nimble.
Likelihood: likely.
Timeframe: medium and long term.
Impact: disruption to operations.
Chronic
Risk
Temporary or permanent closure, or investment in
adaptation, of owned assets and third-party data
centres due to unsuitability for climate impacts.
1.5°C
2°C
3°C
1.5°C
2°C
3°C
2°C
3°C
Likelihood: likely.
Timeframe: long term.
Impact: higher capital investment or write-off of
assets; higher operating costs.
3°C
IT risk assess and stress test data
centres, based on age, location and in-
person visits.
Invest in water-efficient equipment;
rainwater treatment and storage facilities;
and water-saving measures. Discussing
changes in calendar to not plan any races
from June.
Invest in energy-saving measures and
on-site renewables.
3°C
Not yet
quantified.
1.5°C
Immaterial.
2°C
3°C
Immaterial.
Immaterial.
Not yet
quantified.
Not yet
quantified.
Not yet
quantified.
Not yet
quantified.
Not yet
quantified.
Not yet
quantified.
Playtech already has a strong hybrid
working culture and demonstrated an
ability to perform while large parts of
the business were fully working from
home during the COVID-19 pandemic.
Emergency air-conditioned transport
could also be offered to employees where
working from home is not an option
(for example dealers in Live studios).
Increase budgets to support employee
benefits, if necessary.
Key business units are already stocking
up on hardware and components to
ensure business continuity and building
price premiums for priority delivery
into budgets. Additional investments to
quickly relocate stocks, where needed.
Immaterial.
Immaterial. When expanding into new markets or
planning new assets, the resilience of
those locations to the impacts of climate
change will need to be taken into account.
Feasibility studies on the adaptability of
current buildings for projected climate
impacts. Maintenance and periodic
update of business continuity plans.
Risk assess and stress test data centres,
based on age, location and in-person
visits.
Immaterial.
Chronic
Risk
Higher employee-related costs due to inflationary
pressures from climate change and health impacts.
Likelihood: likely.
Timeframe: long term.
Impact: higher operating costs.
2°C
3°C
Not yet
quantified.
Not yet
quantified.
Monitor the business and political
climate in key markets on an
ongoing basis.
Playtech plc Annual Report and Financial Statements 2022
71
Strategic Report Responsible business and sustainability continued
Physical risks continued
Category
Type
Description
Chronic
Risk
Global economic, political and societal instability,
for example due to migration, unavailability of key
life goods, culture change.
Applicable
scenario(s)
3°C
Materiality
Management approach
Not yet
quantified.
Monitor and adapt employee-related
budgets as necessary.
Chronic
Risk
Likelihood: unlikely.
Timeframe: long term.
Impact: disruption of operations and higher taxation.
Extreme weather events and sea level rise would
lead to high investment required to keep vulnerable
assets operational, including the Italian retail
network and Live studios in North and South
America, including in New Jersey.
Likelihood: likely.
Timeframe: long term.
Impact: higher capital investment; write-off of
assets; disruption to operations.
3°C
Not yet
quantified.
Factor future investment into financial
planning; consider future suitability
of locations when expanding; invest
in flood defences where possible or
absorb costs of relocation where not.
Transitional risks
Category
Policy and
Legal
Type
Risk
Description
Carbon taxes could pose an additional cost to the
business and limit high-emission activities such
as flying, which would lead to a need to recruit
expertise locally.
Applicable
scenario(s)
1.5°C
2°C
Market
Risk
Likelihood: very likely.
Timeframe: medium term.
Impact: higher operating costs.
As the impacts of climate change disrupt key
commodity supply chains and agricultural
production, the cost of living is expected to rise. This
would lead to consumers having less disposable
income and would lead to lower revenue for the
consumer-facing business.
Likelihood: about as likely as not.
Timeframe: long term.
Impact: loss of revenue.
Materiality
Management approach
Immaterial. Set and review emission
Immaterial.
reduction targets. Expand
local recruitment networks
and invest in local talent pools.
Relocate employees.
2°C
3°C
Material.
Material.
Monitor the situation and
maintain capacity to supply
increases in demand.
Market
Opportunity/
Risk1
As heatwaves, extreme weather events and wildfires
force consumers to stay home for periods of the
year, there may be growth in online gambling.
2°C
3°C
Likelihood: likely.
Timeframe: long term.
Impact: increase in revenue.
Not yet
quantified.
Not yet
quantified.
Monitor the situation and
maintain capacity to supply
increases in demand. Shift
business units which mainly
rely on physical gambling
activities to offer online products.
Opportunity
Products
and
Services
If casinos are forced to relocate due to the physical
effects of climate change, this could lead to
increased demand for products used by casinos
produced by IGS.
3°C
Immaterial. Monitor the situation and
maintain capacity to supply
increases in demand.
Likelihood: unlikely.
Timeframe: long term.
Impact: increase in revenue.
72 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Category
Type
Description
Markets
Opportunity
If large parts of the tropics and Southern Europe
become less desirable to live in due to the effects
of climate change in these regions, it could lead to
increased attractiveness of key cities in the Northern
Hemisphere where Playtech has large operational
footprints, such as Riga and London.
Likelihood: likely.
Timeframe: long term.
Impact: increase in attractiveness to
prospective employees.
Applicable
scenario(s)
3°C
Materiality
Management approach
Not yet
quantified.
Monitor the situation; maintain and
expand, if necessary, operations
in more attractive locations.
Table B: Climate-related risks and opportunities
1 Depending on the business unit: it’s a risk for business units dependent on physical gambling activities and an opportunity for business units dependent on online gambling activities.
The outcomes of the climate scenario analysis are reflected in the risk management, principal risks and uncertainties section (pages 85-90). The
management approaches identified for likely risks and opportunities are being explored, such as investment in renewable energy generation at
key assets. Going forward, Playtech will update its scenario analysis on an annual basis as more information becomes available on the possible
climate futures that humanity faces and their impacts on business. The results of these exercises will be reported to the Board at least annually
through the Sustainability and Public Policy Committee.
Live Casino championing
environmental action
In 2022, the Live team in Latvia implemented several initiatives
to reduce the environmental footprint of the operation. The
operation in Latvia is unique, as it serves as both an office
and Live Casino studio, which operates 24/7. During the
summertime, the electricity consumed by the central cooling
system is one of the high-emitting sources of the office’s
carbon footprint. To address this challenge, the team installed
a sun-reflective film on the main facade of the building. This
helped to reduce the temperature of the premises, thereby
reducing the amount of energy needed to cool the building.
The team also expanded its waste recycling efforts through
the implementation of a waste disposal system for employees
to recycle plastic bottles and cans.
The most significant initiative in 2022 was switching to
renewable energy. The Live facility switched its electricity to
renewable power sources, including hydro energy. The shift to
renewable energy was a significant step towards reducing the
site’s and Group’s carbon emissions.
Playtech plc Annual Report and Financial Statements 2022
73
Strategic Report Responsible business and sustainability continued
Partnering on shared
societal challenges
Playtech recognises that the challenges facing the sector and
our communities cannot be solved by one organisation alone.
Driving positive social change requires collaboration and partnership.
Our approach
A guiding principle for Playtech’s philanthropic and volunteering
activities is collaboration and partnership. Playtech employees
around the world dedicate their time, skills, money and, most
importantly, passion to support the communities and causes that are
important in their local markets. Playtech established a formal global
programme in 2017 to align its activities around common themes
and outcomes including mental health, digital wellbeing and safer
gambling as well as humanitarian causes, material to the communities
where Playtech operates.
Additionally, we established a Global Community Investment
Committee to oversee and monitor the strategy and governance
of the charity and volunteering activities across the world. In 2022,
Playtech worked with more than 100 local charities in ten markets.
Through the programmes supported, Playtech engaged with more
than 46,000 people in 20221. This is more than a 3.5x increase from
>12,600 people reached in 2021. Community investment includes
gifts in kind, monetary donations and employee volunteering. The
total value of monetary donations totalled over €650,000. Of the ten
countries that took part in the community investment programme,
there was an average of 5% uptake of employees contributing their
time, money or skills in their community.
Building strong and enduring partnerships is central to our approach
in addressing shared societal challenges and making an impact.
The Company is continuously investing in a range of partnerships
with charities, research organisations and social enterprises to
explore how to positively contribute to societal challenges in its
local communities. The following case studies sections provide an
overview of flagship programmes and partnerships designed to make
a difference in the communities where we operate.
1
Engaged is defined as an individual that has directly benefited and/or has interacted with the
programme, supported from financial and/or in-kind support. Community programmes include
all remaining causes except mental health and digital wellbeing, e.g. health and hardship.
Playtech is working with a
diverse range of partners to:
• Help people live healthier online lives and adopt digital
resilience and safer gambling behaviours;
• Contribute to and support research, education and training
to prevent, reduce and address gambling-related harm; and
•
Increase employee participation in and contribution
to volunteering.
Targets and performance
measures
Reach 415,000
people with
digital wellbeing
programmes
by 2025
Engage 30,000
people in
community and
mental health
programmes
to improve
livelihoods
by 2025
5% year-on-
year increase
in employees’
contributions
(skills, time or
money) to the
community,
reaching a
global average
of 10% by 2025
>370,000
People reached
>70,000
People engaged through community investment
and mental health programmes
74 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Supporting our colleagues and communities in Ukraine
The war in Ukraine had an unprecedented impact on the lives of our
employees and country. During the year, Playtech provided a wide range
of support to its employees as well as charities delivering humanitarian aid
to communities across the country. From the inception of the war in early
2022, the Company rapidly mobilised its skills, community budgets, assets
and technology to support employees, their families and local communities.
Across the Group, Playtech donated over €250,000 to eight different
humanitarian organisations, which delivered lifesaving medical equipment
and supplies, essential items and psychological support to people across
the country. Over 300 employees from 14 different countries volunteered
to support their Ukrainian colleagues. Support included establishing
a 24/7 hotline group chat, maintaining daily contact with designated
employees and co-ordinating the transportation and accommodation
outside of Ukraine. In addition, local “essential items” drives were
organised by employees across five Playtech offices, with over 100 boxes
including food, clothing, portable chargers and hygiene products shipped
to Ukraine. A Company-wide fundraising initiative raised over €10,000
and was donated to an additional three humanitarian charities.
In the autumn, colleagues in Ukraine initiated a special initiative called
the “cold winter project”. This initiative is supporting Ukraine-based
charities which are delivering a combination of medical emergency
support, housing, five ambulances and hot meals, supporting thousands
of vulnerable children and families this winter. Playtech continues to
support this initiative and has deployed an additional €100,000 at the
beginning of 2023.
Further information on Playtech’s charitable and humanitarian efforts
are located on pages 8-9.
Delivering positive impact
through Playtech’s Recovery
and Resilience Fund
In 2020, Playtech partnered with Charities Aid Foundation
(CAF) to launch the £3 million COVID-19 Recovery and
Resilience Fund. The fund provided both immediate and
long-term support to charities, social enterprises and
not-for-profit organisations that were dedicated to
delivering mental health services.
The fund has awarded 56 grants to organisations in 10
different locations including: Bulgaria, Cyprus, Estonia,
Gibraltar, IOM, Italy, Latvia, Philippines, UK and US. These
grants supported 18 different causes, with the top 4 causes
being frontline workers (23%), mental health patients (23%),
domestic violence (10%) and at-risk youth (10%). So far, the
fund has collectively reached over 24,000 people directly
and over 1.4 million people indirectly.
One project example is Crisis Text Line, Inc., a US non-profit
organisation dedicated to providing support to people in crisis
through text conversations. In 2020, it saw a 19% increase in
volume compared to 2019, and 19% of its US texters
self-identified as frontline workers. This project helped
cover the costs associated with supporting these texters in
crisis and a total of 4,226 people directly benefited from this
funding. A quote from a beneficiary highlights the positive
impact this service has on so many people: “I really appreciate
what you all are doing. It was very nice to talk to someone who
gave me validation in the way I feel and actually took the time
to listen. It means a lot. Keep doing what you’re doing – you’re
an amazing individual.”
Playtech plc Annual Report and Financial Statements 2022
75
Strategic Report Responsible business and sustainability continued
Partnering for change: Playtech
Cyprus and Generation for
Change CY collaboration for
inclusion and equality
In 2022, Playtech Cyprus continued its partnership with
Generation for Change CY, an organisation committed
to supporting vulnerable and marginalised communities,
including refugees, migrants and asylum seekers. Individuals
from these communities experience significant societal
challenges including cultural differences and understanding
new traditions. The initiatives delivered included the Let’s
Play Together Intercultural 3x3 Basketball Tournament,
a Humanitarian Aid Programme and IT donations. The
organisation Generation for Change CY and 22 Playtech
employees worked together throughout the year to deliver
events and initiatives, all focusing on different aspects
of inclusion.
The basketball tournament helped people from all walks of life
come together to compete in good spirit and with the utmost
respect for one another. The aim of the initiative was to bring
people from different backgrounds together, allowing them to
interact with each other on equal grounds, fostering familiarity,
exchange and appreciation and forming friendships. This initiative
brought together more than 76 players from 21 different countries.
The Humanitarian Aid Programme resulted in the collection of
a large range of products including food, hygiene essentials,
clothes, bedding and kitchen utensils. These collections
directly helped approximately 240 households around Cyprus.
This initiative highlighted the importance of equality and
inclusion for all, as no one should be without the necessities.
Playtech donated five laptops in support of Generation
for Change CY’s educational and skills development
programmes. The laptops helped provide IT skills courses
to 13 participants to develop their digital literacy. In addition,
the laptops allowed the organisation to deliver employability
activities, which included CV writing, job search sessions and
IT skills courses and were delivered to more than 130 job-
seeking individuals from vulnerable communities. Due to the
overall success of the Playtech and Generation for Change
CY partnership, there will be plans for future collaborations.
76 Playtech plc Annual Report and Financial Statements 2022
Investing in safer gambling
research, education and treatment
Healthy online lives and digital wellbeing
The impacts of gambling-related harm, particularly mental
health impacts, have been rising up the agenda and informing
actions amongst health agencies, politicians, regulators,
activists and charities. Scrutiny and pressure on the sector
to act have added urgency, visibility and relevance for
addressing the intersection of these issues. The enormity
of the current situation also serves as an opportunity and
platform for bringing together interested organisations to
make a difference across the issues.
The intersection of gambling, online life and
mental health
Safer gambling
Mental health
Healthy lives and
digital wellbeing
In 2020, Playtech announced a commitment to supporting
programmes and partnerships designed to reduce gambling-
related harm and promote positive digital wellbeing and health
outcomes. In doing so, Playtech formally announced and
committed £5 million over five years in five areas of focus, to
support partnerships and initiatives that can make a positive
difference at the intersection of gambling, online life and mental
health. Playtech has established strategic partnerships with a
growing number of organisations including Betknowmore, Epic
restart foundation, Kindbridge, RG+, the National Centre for
Suicide Prevention, YGAM and more. To date, over 470,000
beneficiaries were reached, both directly and indirectly.
A summary of each of these partnerships is available on
the Playtech website.
Playtech has continued its investment in research,
education and treatment programmes designed to reduce
gambling-related harm. In 2022, Playtech invested over
£1,010,000 in such programmes and initiatives. Below are
a few examples of programmes supported during the year.
Strategic Report
Collaborating to reduce
gambling-related financial harm
Worksafe
Since 2019, Playtech has partnered and participated in GamCare’s
Gambling Related Financial Harm (GRFH) programme. Launched
in 2019, the aim of this programme is to develop a best practice
framework for the identification and support of players experiencing
financial difficulty due to gambling-related harm. This multi-
stakeholder initiative brings together lived experience as well as
representatives from the financial sector, the gambling industry,
money and debt advice organisations, gambling treatment and
support services, and research bodies to share best practices, set
new standards, innovate and connect.
The initiative helps organisations better understand the links
between gambling-related financial harm, in particular debt,
and enables them to better help the individuals affected. It has
launched a comprehensive toolkit for financial institutions, gambling
businesses and debt advice agencies across the UK to help them
recognise, support and refer people experiencing GRFH. This
ensures that common language is used and GRFH interventions
are built into processes and cascaded to frontline staff. Various
virtual and in-person workshops and networking events were
organised for frontline workers who might encounter debt and other
gambling-related financial harms. In total, 338 professionals were
reached directly in 2022, with 222 of those receiving wider learning or
engagement under the programme.
Playtech is funding the development of Worksafe by Betknowmore
UK and GamCare. Worksafe is a workplace wellbeing programme
focused on the prevention and reduction of harms linked to gambling
and related digital behaviours. The programme aims to fill the gap
in relation to gambling, in the training, resources and care provided
to employees to maintain positive mental health through enhanced
resilience in the workplace.
The programme accelerated in 2022, after being delayed due to the
COVID-19 pandemic. The programme’s strategy focuses on three
priority areas: awareness raising, capability building and research. A
workshop was created to improve people’s ability to recognise and
respond to gambling in the workplace. The workshop is flexible so
that it can apply to SMEs and multinationals in every conceivable
sector. Content includes lived experience of people with gambling
harms and others who have been affected in the most sensitive
but impactful way possible. It has been piloted with 34 different
organisations, which have in turn provided feedback on the content
and structure of the programme. There are four bespoke packages
offered and the resources will be City & Guilds quality assured. In
the meantime, the Worksafe team has developed partnerships with
umbrella organisations for the sectors it intends to prioritise. These
include gambling operators, local and central government, housing
associations, finance and retail. Worksafe will be formally launched
into the marketplace in early 2023, with a view to becoming
self-sustaining in the future.
Playtech plc Annual Report and Financial Statements 2022
77
Strategic Report
Chief Financial Officer’s review
Record performance
with continued
strength in B2B and B2C
Overview
Group performance
Overall, Playtech had an excellent 2022, with Adjusted EBITDA
of €405.6 million (2021: €317.1 million), an increase of 28%
(22% on a constant currency basis) compared to 2021. Similarly,
reported EBITDA increased by €91.2 million to €372.5 million
(2021: €281.3 million). Total reported revenue from continuing
operations was €1,601.8 million (2021: €1,205.4 million), representing
a 33% increase (31% on a constant currency basis) compared to
2021. The excellent overall results in 2022 were driven by continued
strength in the Group’s online businesses as well as retail reopening
following pandemic-related closures in parts of 2021 in many of the
Group’s markets.
Chris McGinnis
Chief Financial Officer
78 Playtech plc Annual Report and Financial Statements 2022
The strong performance was driven by both the B2C and B2B
divisions. In B2C, Snaitech had an excellent 2022 performance as
the strong results in its online business continued and its retail shops
were open for the entirety of 2022, following the pandemic-related
closures for most of H1 2021. This led to B2C Adjusted EBITDA of
€245.4 million, an increase of 38% compared to 2021.
In B2B, the results were driven by strong growth in regulated markets,
with revenues growing by 22% from €378.7 million to €461.6 million
(18% on a constant currency basis), led by Caliente in the Americas
and Holland Casino in Europe, validating the strategy of focusing on
opportunities in regulated and soon to be regulated markets.
Reported and adjusted profit
Adjusted profit before tax from continuing operations increased
by 79% to €215.4 million (2021: €120.4 million), driven by the rise
in Adjusted EBITDA, decrease in depreciation and amortisation
and increase in finance income due to favourable EUR/USD
FX movements.
Reported profit before tax from continuing operations decreased to
€95.6 million (2021: €605.0 million), mainly due to the €583.2 million
of unrealised fair value gains on derivative financial assets recognised
in the prior year with the current year fair value gain being only
€6.0 million.
This led to a total post-tax reported profit from continuing operations
of €40.6 million (2021: €686.7 million).
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 €272.4 million
as at 31 December 2022 (31 December 2021: €434.3 million). The
decrease is a result of fully paying down the outstanding Revolving
Credit Facility (RCF) balance of €166.1 million in July 2022, as well
as the €330.0 million part repayment of the 2018 Bond, offset by
the €223.9 million cash consideration received on the disposal of
Finalto and the positive cash generation due to the performance of
the Group during the year. The Group now has a reduced leverage
position with net debt decreasing by €332.6 million to €275.2 million
as at 31 December 2022 (31 December 2021: €607.8 million). Net
debt/Adjusted EBITDA was 0.7x as at the year end, a significant
improvement to the ratio at 31 December 2021 of 1.9x.
Finalto sale
The sale of the Finalto division to Gopher Investments completed
in July 2022. The final cash proceeds from the disposal were
$228.1 million (€223.9 million), which includes an enterprise value of
US$250 million offset by a completion accounts adjustment.
Playtech used part of these proceeds to repay its RCF in full in July
2022 with the remainder used for general corporate purposes.
Strategic Report Group summary (continuing operations)3
Divisional performance
B2B Gambling
B2C Gambling
Intercompany
Total Group revenue from
continuing operations
Adjusted costs
Adjusted EBITDA from
continuing operations
Reconciliation from EBITDA to
Adjusted EBITDA:
EBITDA
Employee stock option expenses
Professional fees
Fair value change of redemption liability
Ukraine employee support costs
Onerous contract
Provision for other receivables
Charitable donation
Settlement of legal matter
Adjusted EBITDA
Adjusted EBITDA margin
2022
€’m
632.4
983.1
(13.7)
1,601.8
(1,196.2)
2021
€’m
554.3
663.7
(12.6)
1,205.4
(888.3)
405.6
317.1
372.5
8.0
15.7
(4.3)
3.3
10.4
—
—
—
405.6
25%
281.3
13.1
14.4
1.3
—
—
1.2
3.5
2.3
317.1
26%
Overall, the Group’s total revenue from continuing operations
increased by 33% to €1,601.8 million (2021: €1,205.4 million),
mostly driven by retail reopening following COVID-19 related
restrictions which impacted H1 2021 in many of the Company’s main
markets, including Italy, as well as its continued growth in regulated
B2B markets.
In B2B, revenue increased by 14% from €554.3 million in 2021 to
€632.4 million in 2022, driven by Mexico, where Caliente continued
its strong growth, as well as increases seen in other countries such as
the Netherlands, Poland and Brazil, partly offset by a decrease in the
UK and Asia.
The Group’s total reported revenues from its B2C operations
increased by 48% to €983.1 million (2021: €663.7 million). Snaitech
had an excellent performance as the strong results in its online
business continued and its retail shops were open for the entirety of
2022, following the pandemic-related closures for most of H1 2021.
The Group’s Adjusted EBITDA from continuing operations increased
to €405.6 million (2021: €317.1 million), representing a 28% and 22%
increase on an actual and constant currency basis, respectively.
Adjusted EBITDA margin decreased by only 90bps in 2022 versus
2021 due to a change in channel mix, with the return of the lower
margin retail segment for the full year 2022, versus closures during
the first half of 2021 due to COVID-19, as well as increased bad debt
provision in the B2B business in Asia, recognised in H1 2022.
The Group’s total reported EBITDA increased by 32% to
€372.5 million (2021: €281.3 million). The adjusted items between
reported and Adjusted EBITDA are explained in Note 10 of the
financial statements.
28%Growth in Group
Adjusted EBITDA
B2B Gambling
B2B Gambling revenue
Regulated – Americas
Regulated – Europe
(excluding UK)
Regulated – UK
Regulated – Rest of the world
Total regulated B2B revenue
Unregulated excluding Asia
Total core B2B revenue
Asia
2022
€’m
2021
€’m
Change
%
Constant
currency
%
144.7
101.3
43%
27%
184.6
126.7
5.6
461.6
103.6
565.2
67.2
141.4
132.1
3.9
378.7
93.7
472.4
81.9
554.3
31%
(4)%
44%
22%
11%
20%
(18)%
14%
31%
(5)%
44%
18%
10%
16%
(21)%
11%
Total B2B Gambling revenue
632.4
Overall, B2B Gambling revenues increased by 14% (11% on a
constant currency basis), largely due to an increase in the regulated
B2B business.
Core B2B Gambling revenues2 increased by 20%, driven by an
increase in regulated markets in the Americas and Europe (excluding
the UK), as well as unregulated markets (excluding Asia) of 43%, 31%
and 11% respectively (27%, 31% and 10% respectively on a constant
currency basis). This was offset by a 4% decrease in revenues from
UK (5% on a constant currency basis), and an 18% (21% on constant
currency basis) decline in revenues from Asia.
The increase in the Americas was primarily driven by Mexico, due to
revenue growth from Caliente while in Europe (excluding the UK) the
growth was driven by the Netherlands, Poland, Spain and Ireland. The
increase in the Netherlands was driven by the expanded long-term
strategic software and services agreement with Holland Casino,
which successfully launched in October 2021. In unregulated markets
excluding Asia, the increase was driven by very strong growth in
Brazil, offset in part by a decline in Germany, which saw regulatory
changes in 2021, and the Netherlands moving to a regulated market.
Asia revenue decreased mainly due to the lockdowns in China and
other parts of Asia in the period, whereas in the UK our partnership
with Entain continues to reduce in scope.
B2B Gambling costs
Research and Development
General and Administrative
Sales and Marketing
Operations
Total B2B Costs
Total B2B Revenue and Costs
B2B revenue
B2B Costs
Total B2B Adjusted EBITDA
Margin
2022
€’m
87.5
82.6
16.8
285.3
472.2
2021
€’m
78.2
67.2
13.5
256.2
415.1
632.4
(472.2)
160.2
25%
554.3
(415.1)
139.2
25%
Change
%
12%
23%
24%
11%
14%
14%
14%
15%
Playtech plc Annual Report and Financial Statements 2022
79
Strategic Report Snaitech
Snaitech revenues increased 54% from the prior year to €899.8 million
(2021: €584.7 million), with operating costs seeing a similar increase
of 61% to €645.6 million (2021: €402.1 million). The retail network in
Italy was shut for almost the entirety of H1 2021 due to the COVID-19
pandemic. The relaxing of COVID-19 restrictions at the end of June
2021 enabled retail sites to reopen, which drove the increase in
revenues and costs in 2022. The online segment continues to see
impressive growth, indicating that the addressable market has
expanded post-pandemic.
Snaitech’s Adjusted EBITDA increased by 39%, while revenue
increased 54%. As a result, Snaitech’s Adjusted EBITDA margin
decreased 300 bps to 28% (2021: 31%), due to the return of the lower
margin retail business.
Sun Bingo White Label
Revenue from the Sun Bingo business increased by 5% to
€65.3 million (2021: €61.9 million). However, operating costs within
Sun Bingo increased by 15% to €63.3 million (2021: €55.2 million). The
main reason for the increase is that, following the commencement
of the new contract with News UK, the cost structure of the business
changed. From July 2021, Playtech incurs the marketing costs
(previously they were recharged to News UK) and furthermore, there
is now a brand fee being charged by News UK (previously this was
covered by the minimum guarantee).
This led to Adjusted EBITDA of €2.0 million (2021: €6.7 million).
Adjusted EBITDA still includes the unwinding of the minimum
guarantee prepayment of €5.4 million in the current year (2021:
€11.9 million) over the new period of the contract which was
renegotiated in 2019.
On a reported basis Playtech incurred a one-off cost of €10.4 million
in H1 2022 to terminate an onerous contract with a service provider.
The termination of the agreement will improve the profitability of the
business going forward.
HAPPYBET
The Sport B2C business, saw year-on-year revenue growth of 10%
to €20.1 million (2021: €18.2 million), with costs increasing by 4%.
The business remains loss making, with Adjusted EBITDA loss in the
current period of €10.8 million (2021: loss of €11.4 million). The small
improvement is primarily driven by the reopening of retail sites and
early progress after the Snaitech management team took control of
HAPPYBET’s operations.
Chief Financial Officer’s review continued
Divisional performance continued
B2B Gambling continued
B2B Gambling costs continued
Research and Development (R&D) costs include, among others,
employee-related costs and proportional office expenses. Expensed
R&D costs increased by 12% to €87.5 million (2021: €78.2 million),
driven by the increase in employee-related costs. Capitalised
development costs were 39% of total B2B R&D costs in 2022,
which is in line with the prior year.
General and Administrative costs include employee-related costs,
proportion of office expenses, consulting and legal fees, and
corporate costs such as audit and tax fees and listing expenses.
These costs increased by 23% to €82.6 million (2021: €67.2 million),
due to a new bonus scheme provision for employee retention,
increase in consulting fees and post COVID-19 costs.
Sales and Marketing costs increased by 24% to €16.8 million (2021:
€13.5 million), mainly due to increased marketing activity following
the end of the COVID-19 crisis as well as higher bonus provisions.
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 11% to
€285.3 million (2021: €256.2 million), driven mainly by an increase in
employee related costs relating to live operations and the provision
of additional B2B services, mainly under the Group’s structured
agreement arrangements, as well as sport hardware costs.
B2B Adjusted EBITDA
Total B2B Adjusted EBITDA increased by 15% to €160.2 million
(2021: €139.2 million), while EBITDA margin remained steady at 25%
(2021: 25%). The B2B Adjusted EBITDA in the period was impacted by
the €15.4 million doubtful debt provision in Asia recognised in H1 2022
(2021: €7.5 million), which was offset by the increase in performance
from Brazil and Mexico and more generally the sports product.
B2C Gambling
Snaitech
Gambling revenue1
Gambling costs
Adjusted EBITDA
Margin
Sun Bingo White Label
Gambling revenue
Gambling costs
Adjusted EBITDA
Margin
HAPPYBET
Gambling revenue
Gambling costs2
Adjusted EBITDA
Margin
B2C Adjusted EBITDA
Margin
2022
€’m
2021
€’m
Change
899.8
645.6
254.2
28%
65.3
63.3
2.0
3%
20.1
30.9
(10.8)
NA
245.4
25%
584.7
402.1
182.6
31%
61.9
55.2
6.7
11%
18.2
29.6
(11.4)
NA
177.9
27%
54%
61%
39%
5%
15%
(70)%
10%
4%
5%
38%
1
2
Includes intercompany revenue from HAPPYBET of €2.1 million (2021: €1.1 million).
Includes intercompany costs from Snaitech of €2.1 million (2021: €1.1 million).
80 Playtech plc Annual Report and Financial Statements 2022
Strategic Report contingent consideration and redemption liability to €0.1 million (2021:
€4.8 million). Adjusted finance costs increased by 11% to €69.9 million
(2021: €62.9 million). The difference between adjusted and reported
finance costs is the movement in contingent consideration and
redemption liability of €0.1 million (2021: €4.8 million) and fair value
loss of the GameCo convertible loan of €3.0 million.
Unrealised fair value changes of derivative financial assets
The unrealised fair value changes of derivative financial assets of
€6.0 million (2021: €583.2 million) is due to the recognition of the fair
value of the various call options held by the Group in Latin America
which fall under the definition of derivatives within IFRS 9 Financial
Instruments. Further details on the fair value of the various call options
are disclosed in Note 20, which includes a significant judgement
made in relation to the valuation of the Playtech M&A Call Option.
Taxation
A reported tax expense from continuing operations of €55.0 million
(2021: tax credit of €81.7 million) arises on a profit before tax of
€95.6 million (2021: €605.0 million) compared to an expected charge
of €18.2 million based on the UK statutory rate of 19%. The key items
for which the reported tax charge has been adjusted are the provision
of €8.4 million in respect of overseas tax audits and the reversal of
deferred tax liabilities of €8.3 million in respect of intangibles assets
acquired through business combinations.
The Group’s reported effective tax rate for the current period is 39.5%.
This rate is higher than the UK statutory rate of 19%. The key reasons
for the differences are profits of subsidiaries located in territories
where the tax rate is higher than the UK statutory tax rate (which
predominately relates to Snaitech based in Italy) and expenses not
deductible for tax purposes including professional fees, impairment of
intangible assets and loss on disposal of subsidiaries.
The total adjusted tax expense is €54.9 million (2021: tax credit
of €7.2 million) which arises on an adjusted profit before tax of
€215.4 million (2021: €120.4 million). The total adjusted tax expense
of €54.9 million consists of an income tax expense of €20.4 million
(2021: tax charge of €14.6 million) and a deferred tax expense of
€34.5 million (2021: deferred tax credit of €21.8 million). The total
adjusted deferred tax expense mainly consists of a deferred tax
expense of €44.7 million relating to the Snaitech group including the
use of Snaitech tax losses and a credit of €16.7 million relating to UK
tax losses for which a tax benefit is recognised in the current year.
The Group’s effective adjusted tax rate for the current period is 25.5%.
This rate is higher than the UK statutory rate of 19% as there are
profits within subsidiaries located in territories where the tax rate is
higher than the UK statutory tax rate (which predominately relates to
Snaitech based in Italy).
Below EBITDA items
Depreciation and amortisation
Reported and adjusted depreciation decreased by 3% to
€41.5 million (2021: €42.9 million). After deducting amortisation of
acquired intangibles of €42.0 million (2021: €34.8 million), Adjusted
amortisation decreased by 9% to €67.8 million (2021: €74.5 million)
as the Italian gaming machine licences useful life has been extended
to June 2023 at no cost. The remainder of the balance under
depreciation and amortisation of €18.8 million (2021: €16.9 million)
relates to IFRS 16 Leases and the recognition of the right-of-use
asset amortisation.
Impairment of tangible and intangible assets
The reported impairment of tangible and intangible assets of
€38.5 million (2021: €21.6 million) mostly relates to:
• the impairment of the Eyecon cash-generating unit (CGU) of
€13.6 million, driven by the fact that its operations are highly
concentrated in the UK online market which has seen a slowdown
due to the uncertain regulatory climate;
• the impairment of the Quickspin CGU of €7.0 million, given the risk
the CGU bore from the proportion of revenues being generated
from the Group’s B2B customers choosing to operate in areas with
geopolitical tension, and the resulting 1% increase on the post-tax
discount rate of the CGU to mitigate that factor;
• the impairment of the Bingo VF CGU of €12.5 million (2021:
€6.4 million) due to slower than expected growth in the business,
following plans to recover from the termination of a significant
licensee in the prior year; and
• the impairment of the IGS CGU of €5.6 million, which was severely
affected by COVID-19 and until recently had not managed to bring
revenue up to pre-COVID-19 levels with the business suffering from
cancelled or postponed projects.
The prior period impairment of €21.6 million mainly relates to:
•
€12.3 million impairment resulting from the disposal of some real
estate in Milan. The recoverable amount (being net sales proceeds
as per the binding sale agreement) was compared to the property’s
net book value which led to the impairment;
• €6.4 million impairment in the Bingo VF cash-generating unit
mainly driven by the termination of one of the biggest customer
contracts; and
• €2.7 million of development workforce aborted projects.
Finance income and finance costs
Reported and adjusted finance income of €11.6 million (2021: €1.1
million) mainly relates to a €9.2 million foreign exchange gain, driven
primarily by the favourable movement in the USD to EUR rate during
2022. In the prior year, this was an overall loss of €0.5 million and
hence included in finance costs. The remainder of the finance income
is interest received.
Reported finance costs includes interest payable on the bonds and
other borrowings, bank facility fees, bank charges, interest expense
on lease liabilities, the movement in contingent consideration
and redemption liabilities, fair value loss of convertible loans and
expected credit losses on loan receivables. Reported finance costs
increased by 8% to €73.0 million (2021: €67.7 million), mainly due to
the €3.0 million (2021: €Nil) fair value loss on the GameCo convertible
loan immediately before it was converted to equity and the first
time recognition of €1.6 million of expected credit losses on the
loans receivable. This was offset by a reduction in the movement in
Playtech plc Annual Report and Financial Statements 2022
81
Strategic Report Chief Financial Officer’s review continued
Discontinued operations
Adjusted EPS (in Euro cents)
Casual and Social Gaming segment
On 11 January 2021, the Group entered into an agreement for the
disposal of the remainder of the business, namely “YoYo”, for a
total consideration of $9.5 million resulting in a profit on disposal of
€7.6 million. This business has now been fully disposed.
The Adjusted EBITDA relating to the Casual and Social Gaming
business was €Nil in both periods being presented as operations
were completely wound down in 2020.
Finalto (formerly TradeTech Group)
Finalto was disposed of in July 2022 with cash proceeds of
$228.1 million (€223.9 million) and transaction costs of €1.6 million
resulting in a profit on disposal of €15.1 million.
In terms of performance, revenue up until the point of disposal was
€74.5 million (2021 full year revenue: €46.6 million). The improved
performance was due to higher market volatility during 2022, which in
turn increased both Reported and Adjusted EBITDA to €24.4 million
for the period up to the point of disposal (2021 full year loss:
€30.9 million) and €33.8 million (2021 full year loss: €23.0 million),
respectively.
Adjusted profit
Reported profit from continuing operations
attributable to the owners of the Company
Employee stock option expenses
Professional fees
Fair value change and finance cost on redemption
liability and contingent consideration
Ukraine employee support costs
Onerous contract
Charitable donation
Settlement of legal matter
Provision for other receivables
Fair value change of equity instruments
Fair value change of derivative financial assets
Fair value loss on convertible loans
Amortisation of intangibles on acquisitions
Impairment of tangible and intangible assets
Loss on disposal of subsidiary
Deferred tax on acquisitions
Deferred tax on reorganisation
Deferred tax on asset held for sale
Tax related to uncertain positions
2022
€’m
2021
€’m
40.6
8.0
15.7
686.7
13.1
14.4
(4.2)
3.3
10.4
—
—
—
0.3
(6.0)
3.0
42.0
38.5
8.8
(8.3)
6.1
—
—
3.5
2.3
1.2
1.6
(583.2)
—
34.8
21.6
—
(9.1)
— (63.6)
(1.8)
—
—
8.4
Adjusted Profit from continuing operations
attributable to the owners of the Company
160.5
127.6
The reconciling items in the table above are further explained in
Note 10 of the financial statements. Reported profit before tax from
continuing operations was €95.6 million (2021: €605.0 million), mainly
due to the €583.2 million of unrealised fair value gains on derivative
financial assets recognised in the prior year with the current year gain
being only €6.0 million.
Adjusted basic EPS from continuing operations
Adjusted diluted EPS from continuing operations
Basic EPS from profit attributable to owners
of the Company
Diluted EPS from profit attributable to owners
of the Company
Basic EPS from profit attributable to the owners
of the Company from continuing operations
Diluted EPS from profit attributable to the owners
of the Company from continuing operations
2022
€’m
53.5
51.5
2021
€’m
42.8
40.9
29.2
226.3
28.1
216.2
13.5
230.3
13.0
220.1
Basic EPS is calculated using the weighted average number of equity
shares in issue during 2022 of 300.1 million (2021: 298.2 million).
Diluted EPS also includes the dilutive impact of share options and
is calculated using the weighted average number of shares in issue
during 2022 of 311.9 million (2021: 312.1 million).
Cash flow
Cash conversion (including discontinued operations)
Playtech continues to be cash generative and delivered operating
cash flows of €410.9 million (2021: €314.6 million after adjusting for the
€89.6 million deferred payment of gaming duties in Italy). The increase
is primarily due to Snaitech’s retail locations being fully operational
in 2022 as opposed to the prior period where COVID-19 related
restrictions meant retail sites were closed for most of H1 2021, as
well as a better performance from the rest of the business, including
Finalto, compared to the prior year.
Adjusted EBITDA (including
discontinued operations)
Net cash provided by operating activities
Deferred payment of gaming duties
Net cash provided by operating activities
after deferred payment of gaming duties
Cash conversion
Change in jackpot balances and security deposits
Change in client deposits and client funds
Professional fees
ADM security deposit (Italian Regulator)
Adjusted net cash provided by
operating activities
Adjusted cash conversion
2022
€’m
2021
€’m
439.4
410.9
—
410.9
94%
(3.6)
15.3
24.4
11.5
294.1
225.0
89.6
314.6
107%
(10.5)
(21.7)
21.5
(1.7)
458.5
302.2
104%
103%
Adjusted cash conversion at 104% (2021: 103%) is shown after
adjusting for the deferred payment of gaming duties in the prior year,
as well as jackpots, security deposits, client deposits and client funds,
professional fees and ADM security deposit.
Adjusting for the above cash fluctuations is essential in order to truly
reflect the quality of revenue and cash collection. This is because
the timing of cash inflows and outflows for gaming tax duties in Italy,
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.
82 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Cash conversion (excluding discontinued operations)
Balance sheet, liquidity and financing
Cash and cash equivalents
Cash held on behalf of clients, progressive jackpots
and security deposits
Adjusted gross cash and cash equivalents
(excluding assets and liabilities held for sale)
Loans and borrowings (RCF)
Bonds
2022
€’m
2021
€’m
426.5
575.4
(154.1)
(141.1)
272.4
434.3
—
547.6
167.1
875.0
Gross debt (excluding liabilities held for sale)
547.6
1,042.1
Net debt (excluding assets and liabilities held
for sale)
Adjusted EBITDA
275.2
607.8
405.6
0.7
317.1
1.9
396.9
317.9
Net debt/Adjusted EBITDA ratio
Adjusted EBITDA
Net cash provided by operating activities
Deferred payment of gaming duties
Net cash provided by operating activities
after deferred payment of gaming duties
Cash conversion
Change in jackpot balances and security deposits
Change in client funds
Professional fees
ADM security deposit (Italian Regulator)
Adjusted net cash provided
by operating activities
Adjusted cash conversion
2022
€’m
405.6
382.7
—
2021
€’m
317.1
227.6
89.6
382.7
94%
317.2
100%
(3.6)
(9.4)
15.7
11.5
(10.5)
(1.5)
14.4
(1.7)
98%
100%
If we exclude the impact of Finalto cash flow, the adjusted cash
conversion reduces to 98% (2021: 100%).
Cash flow statement analysis
Net cash outflows used in investing activities totalled €358.3 million
(2021: €127.6 million) of which:
• €30.4 million (2021: €16.7 million) relates to loans granted. Of the
total granted in 2022, €18.0 million (2021: €8.1 million), relates to the
Galera Group which has a total loan facility of $45 million (refer to
Note 20) and €8.4 million is related to NorthStar;
• €54.0 million (2021: €49.6 million) was used in the acquisition
of property, plant and equipment;
• €10.1 million (2021: €7.2 million) was used in the acquisition
of intangible assets;
• €61.3 million (2021: €57.4 million) was spent on capitalised
development costs;
• €29.2 million relates to the payment for the acquisition of LSports
(Note 20A) and contingent consideration paid to Wplay of
€1.0 million (2021: €4.2 million relates to the payment of the call
option held for Ocean Holdings Ltd and contingent consideration
paid to Wplay of €4.1 million); and
• net cash outflow in relation to the Financial segment disposal of
€169.8 million (2021: Cash inflow of €10.7 million mostly relating the
disposal of the casual business).
Net cash outflows used in financing activities totalled €566.9 million
(2021: €218.4 million) of which:
• €36.7 million (2021: €39.4 million) relates to interest payments on
bond loans and bank borrowings;
• €166.1 million (2021: €150.0 million) related to the repayment
of the RCF;
•
in 2022 €330.0 million related to the part repayment of the
2018 Bond;
• €5.9 million (2021: €0.7 million) are payments of contingent
consideration and redemption liability; and
• €28.2 million (2021: €28.3 million) is principal and interest lease
liability payments.
Cash
The Group continues to maintain a strong balance sheet with
total cash and cash equivalents, excluding cash held for sale,
of €426.5 million at 31 December 2022 (2021: €575.4 million).
Adjusted gross cash, which excludes the cash held on behalf of
clients, progressive jackpots and security deposits, decreased to
€272.4 million as at 31 December 2022 (2021: €434.3 million), due
to the €166.1 million RCF repayment, €330.0 million part repayment
of the 2018 Bond, both offset by the net proceeds from the Finalto
disposal as well as the solid performance of the Group during 2022.
Financing
The Group’s total gross debt decreased to €547.6 million as at
31 December 2022 (2021: €1,042.1 million), with net debt, after
deducting Adjusted gross cash, decreasing to €275.2 million
(2021: €607.8 million).
The Group issued a five-year senior secured note of €530.0 million
(3.75% coupon), which was raised in October 2018 to support the
acquisition of Snaitech and is maturing in October 2023. During
the year, the Group made a €330.0 million partial repayment of the
2018 Bond. The remaining outstanding balance of €200.0 million is
expected to be repaid through cash resources and/or proceeds from
the Group’s RCF and/or new financing.
The Group has also issued a seven-year senior secured note to the
value of €350.0 million (4.25% coupon, maturity 2026), which was
raised in March 2019.
Finally, the Group also has an RCF which has been restructured
during the year. The revised facility is now €277.0 million (previously
€317.0 million) and is available until October 2025, with an option to
extend by 12 months. As at the reporting date the credit facility drawn
amounted to €Nil (2021: €167.1 million).
Playtech plc Annual Report and Financial Statements 2022
83
Strategic Report Chief Financial Officer’s review continued
Balance sheet, liquidity and financing continued
Net debt
Net debt decreased in the period by €332.6 million to €275.2 million as at 31 December 2022 (2021: €607.8 million), while net debt/Adjusted
EBITDA was 0.7x (31 December 2021: 1.9x).
Finalto sale
The sale of the Finalto division to Gopher Investments, which was first presented by the Group under discontinued operations at 31 December
2020, completed in July 2022. The cash proceeds from the disposal were $228.1 million (€223.9 million), which includes an enterprise value of
US$250 million, offset by a completion accounts adjustment.
Playtech used part of these proceeds to repay its RCF in full in July 2022.
Contingent consideration
Contingent consideration and redemption liability decreased to €2.9 million (2021: €11.0 million) mostly due to the completed payment relating
to Eyecon Limited, Wplay and Statscore. The existing liability as at 31 December 2022 comprised the following:
Maximum payable earnout
(per terms of acquisition)
Contingent consideration and redemption
liability as at 31 December 2022
Payment date (based on
maximum payable earnout)
€46.7 million
€0.8 million
€2.1 million
€0.8 million
Q4 2025
Various
Acquisition
AUS GMTC PTY Ltd
Other
Going concern
The payment related to the renewal of the Italian concessions is
expected to be incurred in 2025 and therefore is outside of the going
concern period.
Management concluded that the risk of a covenant breach over the
next 15-month period from the date of releasing this report is low
and as such, has a reasonable expectation that the Group will have
adequate financial resources to continue in operational existence.
1
2
3
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 represent more closely the consistent trading performance of the business.
A full reconciliation between the actual and adjusted results is provided in Note 10 of the
financial statements.
Core B2B Gambling refers to the Company’s B2B Gambling business excluding
unregulated Asia.
Totals in tables throughout this statement may not exactly equal the components of the total
due to rounding.
Chris McGinnis
Chief Financial Officer
23 March 2023
In adopting the going concern basis in the preparation of the
financial statements, the Group has considered the current trading
performance, financial position and liquidity of the Group, the principal
risks and uncertainties together with scenario planning and reverse
stress tests completed for a period of no less than 15 months from the
approval of these financial statements.
At 31 December 2022, the Group held total cash (excluding cash
included in assets held for sale) of €426.5 million (2021: €575.4 million)
and Adjusted gross cash, which excludes the cash held on behalf of
clients, progressive jackpots and security deposits, of €272.4 million
(2021: €434.3 million).
Furthermore, the Group has reduced its total debt to €547.6 million
(2021: €1,042.1 million), as a result of using the Finalto proceeds to
fully repay its RCF (31 December 2021: €167.1 million), and a €330.0
million partial repayment of its 2018 Bond. The rest of the 2018 Bond
of €200.0 million is repayable in October 2023, and the Directors are
confident that the company will be able to settle this amount. During
2022, the RCF was restructured with a new facility of €277.0 million
being available until October 2025, with an option to extend by 12
months. As at 31 December 2022 the RCF is fully undrawn.
84 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Risk management, principal risks and uncertainties
Risk on
the agenda
“ Operating in a rapidly changing
environment, we recognise
the increasing importance of
risk management activities
to successfully deliver our
strategic objectives.”
Anna Massion
Chair of the Risk & Compliance Committee
A message from the Chair of the Risk &
Compliance Committee
2022 has been challenging with another period of uncertainty. We
entered the year still feeling the after effects of the pandemic while the
conflict in Ukraine exacerbated inflationary pressures and increased
political volatility across the globe. Operating in this macroeconomic
environment, we recognise the increasing importance of risk
management activities to successfully deliver our strategic objectives.
As a Non-executive Board member and Chair of the Risk & Compliance
Committee, my role is to oversee the risk management activities of
Playtech. Here, I present an overview of the principal risks we face as
a Company and, while it is impossible to eliminate these entirely, how
we mitigate these risks to manage our exposure to an acceptable
level and, equally, capture opportunities where possible.
Mitigating geopolitical tensions and
inflationary pressures
As a Company we have responded to the ongoing conflict in Ukraine,
prioritising our people and their families by initiating evacuation plans
with resounding support from the rest of the Company. Led by our
CEO and COO, we initiated dedicated business continuity planning
protocols and continue to conduct regular risk assessments to
monitor the ongoing situation.
The conflict has also contributed to the economic volatility that we
are faced with across the globe. Rising interest and inflation rates and
the global threat of recession contribute to difficulties in managing the
economic climate and meeting the expectations of our stakeholders,
particularly supporting our globally positioned staff. We are closely
monitoring the economic environment and preparing appropriate
responses and action plans to mitigate the risks to an acceptable level
and support our staff as best we can.
Managing cyber threats in a data driven world
Data is our most valuable asset and with it comes significant
responsibility and vulnerability. The increasing threat to our security
network is twofold: our internal systems being breached resulting
in unauthorised access to our proprietary data and our sensitive
employee and customer information being accessed externally.
Ensuring that we are up to date with the most robust tools builds
our strength and resilience to protect our security environment.
Keeping up to date with an evolving
regulatory landscape
Regulations are continuing to evolve as the industry matures, which
can change at short notice; therefore, it is vital we keep abreast of
these changes in a time-sensitive manner.
Playtech plc Annual Report and Financial Statements 2022
85
Strategic Report Risk management, principal risks and uncertainties continued
Dealing with the impacts of climate change
The financial impact of both physical and transitional risks related to
climate change continue to be of importance to ourselves and our
stakeholders. Playtech’s TCFD statement and long-term strategy
to address climate change risks and opportunities are extensively
examined on pages 67 to 73 of the Annual Report. This year, climate
risks have been specifically referenced in two principal risks “Building
a sustainable business” and “Complying with a changing landscape in
legal, regulatory, licensing and tax requirements” where we consider
the risks and mitigative actions in further detail.
A focus on newly regulating markets
We make developing business in a sustainable way and meeting our
business objectives our priority by applying a risk-based approach.
Focusing on regulated markets and diversifying revenue streams
across customer, product and geography allows us to limit our
exposure. There remains plenty of growth opportunities for us in
countries that are starting to regulate online gambling. For example,
many states in the US have introduced regulation with others
considering it and Brazil has also introduced regulation, even if the
implementation itself seems an extra step away. As we head into
2023, we anticipate that the growth in appetite of these countries
will increase, providing further opportunities for us to offer our
market-leading software as we apply our balanced risk approach.
Anna Massion
Chair of the Risk & Compliance Committee
23 March 2023
Keeping up to date with an evolving
regulatory landscape continued
Existing markets are tightening regulation to support a more
sustainable regulatory environment. New and emerging markets
are also evolving and learning, which can make it challenging both
operationally and commercially to keep ahead of all these changes.
Our presence in Italy has been of increasing strategic importance
to us over the years. With the growing success in this jurisdiction,
we have been exposed to headwinds of increasing taxes and the
economic pressures that have come from increased regulation
in areas such as key social-related elements like AML, GDPR and
responsible gambling.
It is vital we seek to respond appropriately to regulatory changes. As
a business, we have launched a number of initiatives through the year
such as: investing in safer gambling research and tools, enhancing
the cyber protection levels we can offer our customers and staff
and building an in-house Regulatory Intelligence team.
Prioritising our people and helping them achieve
their potential
Our people make Playtech the success it is today. Talent is coming
at a premium and it is important that we balance the pressures
of inflation with the recessionary environment. With the financial
pressures placed on our people, we see this as an opportunity to
provide assistance to our staff to make their life easier and ensure
their welfare is prioritised. In the race for talent, we have introduced
initiatives concentrating on both supporting and maintaining the
valuable talent we have, while focusing recruiting efforts on talent
that will maximise our potential as a business.
Balancing industry pressure and competition
As markets mature, growth normalises and regulatory changes impose
higher operating costs, our industry continues to consolidate. We are
faced with the constant threat of staying competitive in an industry with
a constant flow of innovation and new entrants, as well as facing cost
pressures from our customers who continue to consolidate.
To respond to this, we are investing our resources in staying on top of
the technological changes in the industry and extending our platform
to be more nimble and agile to address the evolving needs, desires
and jurisdictions of our customers.
“ Regulations are continuing to
evolve as the industry matures,
which can change at short notice;
therefore, it is vital we keep
abreast of these changes in a
time-sensitive manner.”
86 Playtech plc Annual Report and Financial Statements 2022
Strategic Report Risk management, principal risks and uncertainties continued
Outlining our principal risks
During the year, the Company undertook a
review of the principal risks facing Playtech
while considering those that might threaten
the delivery of its strategy and performance
for the upcoming year.
The Board considered Playtech’s principal risks in relation to its
risk approach, to ensure an appropriate response is in place which
effectively mitigates any exposure facing our operations.
The integrity of our business is critical and cannot be put at risk.
We operate in a challenging and highly competitive market and, as
a result, recognise that an appropriate balance needs to be made
to achieve our objectives as a business and deliver sustainable
growth. Playtech’s acceptance of risk is dependent on the assurance
that the potential benefits are realised and risks are mitigated and
monitored effectively.
Our principal risks continue to evolve in response to our changing
risk environment. This year, based on our current assessment
of their materiality, we have highlighted seven principal risks as a
consolidation from last year and assess the evolution from 2021 to
appreciate the current risk environment and our strategy. We have
presented our principal risks under categorisation, considering
key macroeconomic, strategic and operational elements.
1) Recessionary risk
Risk category
Likelihood
Impact
Trend
Macroeconomic
Medium
High
Rising
Link to strategy
1 2 3 4 5 6
Principal risk
The following factors pose a risk in the current macroeconomic
environment: rising inflation, increasing interest rates,
recession and foreign exchange fluctuations. End customers
are facing financial pressures reducing disposable income and
incentives to gamble. With rising inflation, increasing interest
rates and refinancing burdens, this increases the pressure
on our staff and customers and influences our investment
decisions. From a cost perspective, our B2B business is
directly impacted by rising wage pressure and the economic
climate; Snaitech’s retail business is less affected due to the
value sharing agreement with franchisees being based on
revenues, rather than profit.
Fluctuations in foreign exchange rates also pose a risk as
we expand into jurisdictions with volatile currencies, such
as in the Americas. However, this is not as significant across
most of the business as our revenue and cost bases are
evenly matched.
Mitigation
We have implemented some monitoring tactics to keep
abreast of the ongoing situation and the impact on our
operations by:
• actively monitoring the economic environment as it evolves;
• preparing appropriate responses for action plans that we
can take that mitigate the risks to an acceptable level; and
• creating internal remuneration and training schemes to
retain and support existing employees.
Strategic considerations
Protecting the long-term future of the Company and delivering
on our vision is our priority as the uncertain economic climate can
adversely impact this.
Playtech plc Annual Report and Financial Statements 2022
87
Strategic Report Risk management, principal risks and uncertainties continued
Outlining our principal risks continued
2) Geopolitical
unrest
3) Building a sustainable
business
Macroeconomic
Risk category
Medium
High
Stable
N/A
Likelihood
Impact
Trend
Strategic
Low
High
Rising
Risk category
Likelihood
Impact
Trend
Link to strategy
Principal risk
We are entering 2023 with the war in Ukraine still active, but
the situation at present is stable. In addition to the safety of
our staff, there is the risk that regional conflicts will constrain
energy supplies and disrupt major transportation routes,
raising prices across the board and affecting business
operations.
Mitigation
The past year has highlighted how resilient our organisation
can be when we have to prioritise and respond to a crisis. We
developed an effective response to the risks posed on us by
the war in Ukraine by:
• protecting our people and their families which has included
financial support as well as flexible working arrangements;
• ensuring capacity and continuity by managing and
relocating key infrastructure and sharing knowledge and
teams inside and outside of Ukraine; and
•
reviewing reliance on critical supply chains through
effective business continuity planning which has included
implementing backup generators and evacuation plans.
Strategic considerations
Key staff that are critical to delivering our strategic objectives
are still based in Ukraine. We have contingency plans on
standby in case we have to react with immediate notice
and are actively monitoring the situation.
88 Playtech plc Annual Report and Financial Statements 2022
Link to strategy
1 2 3 4 5 6
Principal risk
Growing awareness and visibility on sustainability-related
considerations, such as long-term viability of the operations,
safer gambling and social impacts, add pressure and increase
expectations from stakeholders.
Mitigation
The sustainability of our business is a priority and, while we
have several means to ensure we deliver on this, some of
the key measures we have taken include:
• promoting a safer gambling environment at the forefront
of our operations;
• ensuring our business processes support our sustainable
and responsible business strategy;
• reviewing expectations on key business strategic areas
such as our joint venture agreements and third parties to
assess the sustainable viability of our partners to assure
the ongoing success of the products we offer;
• establishing a Sustainability and Public Policy Board
Committee to oversee and monitor the delivery and
evolution of ESG risks and opportunities, alongside topic
specific governance forums; and
• continuing to review our requirements and expectations
of third parties to assess the sustainable viability of
our partners.
Strategic considerations
The above elements and our mitigation responses enforce
our commitment to maintaining a safe and successful
environment that our stakeholders can have confidence in.
This will elevate us in delivering our vision and meeting our
strategic targets to drive the business forwards.
Strategic Report
4) Complying with a changing
landscape in legal, regulatory,
licensing and tax requirements
5) Remaining
competitive
Risk category
Likelihood
Impact
Trend
Strategic
Medium
High
Stable
Risk category
Likelihood
Impact
Trend
Strategic
High
High
Stable
Link to strategy
1 2 3 4 5 6
Link to strategy
1 2 3 4 5 6
Principal risk
Principal risk
We operate in a constantly changing landscape when it comes to
regulation and legislative requirements. These can evolve at short
notice; therefore, it is vital we keep abreast of these fluctuations
in a time sensitive manner as not only can short notice variations
in legislative requirements restrict market opportunities, they can
also result in market closures and cause loss of revenue to Playtech.
We need to be dynamic when we enter new jurisdictions, which
are also evolving and learning, as it can make it challenging both
operationally and commercially to be ahead of all the legislative
requirements. We are also seeing evolution across environmental,
social and governance regulation and disclosure requirements,
with application to both direct operations and supply chain.
Mitigation
It is vital we react appropriately to regulation in an effective
and responsible way, and we have done so by:
We find ourselves with stronger, more robust competition
which can reduce our market share and limit our potential
for growth. Our market thrives on the presence of active
participants to keep us innovative and relevant and helps us
advance as an industry.
Mitigation
With technology rapidly advancing, industry consolidation
and new and emerging markets on the table, this gives us
further opportunity to build on our strategies of:
•
•
working with innovation at the core of our offering evolving
our products and delivering exciting offerings, from both
a technology and product perspective;
exploring new and emerging markets to accelerate B2B
and B2C growth; and
• promoting a safer gambling environment at the forefront
• dedicating time to retaining and acquiring core talent to
help us drive our strategies.
Strategic considerations
If we do not respond to the market dynamics, it will be more
challenging to achieve our objectives as well as meet and
exceed stakeholder expectations.
of our operations;
• establishing a Playtech Regulatory Intelligence team
which monitors all regions and ensures our processes and
controls are up to date and relevant;
• utilising external advisers and engaging with partners
which are familiar with the landscape where possible, to
reduce any unknown exposure;
• updating the Board fully on all regulatory matters which
provides visibility and consultation from the top; and
• reviewing and regularly assessing our climate-related
risks and opportunities and engaging with our value chain
to mitigate and manage the effects.
Strategic considerations
Increasing regulation puts pressure on new and existing
jurisdictions and therefore the marketplace itself. These
regulations are wide ranging and relate to gambling, listing
rules and financial regulation as well as requirements under
relevant environmental, social and governance-related
regulations. This can lead to higher consolidation in the
marketplace; therefore, keeping informed helps us to remain
competitive and supports our growth.
Playtech plc Annual Report and Financial Statements 2022
89
Strategic Report Risk management, principal risks and uncertainties continued
Outlining our principal risks continued
6) Data breach, technical
systematic failure or security
incident
7) Attracting and retaining
key talent
Risk category
Likelihood
Impact
Trend
Operational
Risk category
Medium
Critical
Stable
Likelihood
Impact
Trend
Operational
Medium
High
Rising
Link to strategy
1 2 3 4 5 6
Link to strategy
1 2 3 4 5 6
Principal risk
Principal risk
Our operational activities depend on our infrastructure
and production facilities to ensure the availability, integrity
and confidentiality of our service, assets and personally
identifiable data that we hold. A compromise of services
or data through a technical system failure, cyber-attack or
breach of security would adversely impact our Company,
including disruptions to operations, regulatory penalties
and prosecution.
Mitigation
Implementing the optimal technology and security strategy
is essential to mitigate this risk. This involves us:
• testing business continuity plans in place to respond
to potential technical failures or incidents;
• establishing technology resilience through a robust
security-focused team which operates under an ISO 27001
Information Security Management standard; and
• building a dedicated Data Protection specialist team that
offers key support to the operational staff.
Strategic considerations
We could be exposed to significant reputational and
operational damage which could limit Playtech’s growth
potential but, with the mitigation features in place, we are
well placed to respond.
Failure to retain and attract the appropriate people, as well as
not adequately planning for the unanticipated departure of
key people, will result in operational deficiencies and hinder
our ability to deliver Company objectives.
Mitigation
Ensuring correct acquisition, retention and management of
key talent across Playtech is a priority to help us achieve our
vision. To help us deliver on this, we ensure we:
• maintain a strong internal recruitment team which
directs focus to key talent pools to attract the right talent
for Playtech;
• build customised strategies to grow existing talent and
concentrate on their wellness, allowing us to sustain the
present and future of Playtech;
• create internal remuneration and training schemes to retain
and support existing employees;
• promote a diverse and inclusive culture through our
Company values to promote sustainable success; and
• establish effective business continuity planning in place to
ensure effective succession.
Strategic considerations
Our Company thrives on the innovation of our people and it
would be impossible for us to achieve our vision without the
support of our employees. Our robust mitigation strategies
ensure we remain a core employer of choice across
the industry.
90 Playtech plc Annual Report and Financial Statements 2022
Strategic Report
Viability statement
The UK Corporate Governance Code requires the Board to explain
how it has assessed the prospects of the Group and state whether it
has a reasonable expectation that the Group can continue to operate
and meet its liabilities, taking into account its current position and
principal and emerging risks.
The Group’s principal markets and strategy are described in detail in
the Strategic Report on pages 24 to 29 and pages 12 to 15, respectively.
The key factors affecting the Group’s prospects are:
• Playtech is a global business and a leading technology provider in
the gambling industry;
• Playtech is well positioned to meet the growing demand for
technology in regulated and regulating markets;
• Playtech has a clear vision for its technology-centric growth
strategy, driven by new licensee and partnership agreements in the
newly regulated markets in the US and LatAm and expanding with
existing customers with additional products and into new markets;
• Playtech through its B2B division has a diverse portfolio with
over 180 licensees across retail and online, in over 40 regulated
jurisdictions; and
• Playtech through its B2C division is a leader in the second largest
European Gambling market with Snaitech in Italy; with this leading
brand and Playtech’s technology it is ideally positioned to continue
its success in this market whilst also being a fast growing player
in Italy in the online sector when measured by Gross Gaming
Revenue (GGR).
The Directors believe that a five-year period is appropriate for their
viability assessment as it is supported by a five-year plan adopted by
the Board, which covers Playtech’s strategy to continue to penetrate
the newly regulated markets in the US and LatAm. This is the longest
timeframe over which the Directors believe they can reasonably
forecast the Group’s performance. This plan relies on certain key
milestones being met in the initial years (including successful entry in
the US and certain LatAm countries), which would then drive further
growth in the latter years. This plan is revised as required to take into
account known facts that will have an impact to the existing forecasts.
In making this statement, the Directors have carried out a robust
assessment of the emerging and principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency or liquidity. This includes the availability and
effectiveness of mitigating actions that could realistically be taken to
avoid or reduce the impact or occurrence of the underlying risks. In
considering the likely effectiveness of such actions, the conclusions
of the Board’s regular monitoring and review of risk management
and internal control systems, as described on pages 85 to 90
are considered.
Base case five-year projections
As set out in the Chief Financial Officer’s review (pages 78 to 84), the
Group had excellent overall results which were driven by continued
strength in the Company’s online businesses as well as retail
reopening following pandemic-related closures in H1 2021 in many
of the Group’s markets, including Italy. Base case projections for
viability purposes have been made using the Directors’ best estimate
including the following key assumptions:
• Modest Adjusted EBITDA growth beyond FY 2023 on
existing business;
• Constant growth in the US;
• High levels of growth in new markets in LatAm;
• Significant cash outlay in the region of €250 – €300 million payable
across 2025 and 2026 in relation to the renewal of the Snai gaming
and betting licenses;
• No major changes in working capital;
• No further impact of COVID-19; and
• No significant changes to Group structure.
The Group has the following borrowing facilities in place (as further
described in Notes 27 and 28 of the Annual Report):
• A revolving credit facility (RCF) of €277.0 million is undrawn as of
31 December 2022 and available until October 2025, with an option
to extend by 12 months;
• The 2018 Bond, issued 12 October 2018 as €530 million of senior
secured notes, maturing in October 2023 (of which €330 million
was repaid in 2022, see below); and
• The 2019 Bond, issued 7 March 2019 as €350 million of senior
secured notes maturing in March 2026.
The resulting financial model assesses the ability of the Group to
remain within the financial covenants and liquidity headroom of its
existing borrowing facilities. Within the five-year assessment period,
the revolving credit facility (RCF) expires as do the 2018 Bond and
2019 Bond. During 2022, the RCF was fully repaid and €330 million of
the 2018 Bond was also repaid, leaving a balance of €200 million that
is due in H2 2023.
Within the five-year plan, the Group assumed that the €200 million
balance left on the 2018 Bond and the €350 million 2019 Bond will be
repaid on maturity. Furthermore, the RCF facility will be utilised based
on the operational and investment needs of the business during the
five-year period, however repaid when free cash is available, in order
to minimise interest costs.
Despite the assumptions made in the five-year plan, the Directors
are confident that if refinancing is required it can be achieved at
acceptable terms, and, even though currently no formal proposal has
been put forward to the Board, the Group is in regular dialogue with its
existing banks, and is continuously reviewing its options.
Climate change impact
Included within our TCFD statement on pages 67 to 69 is the Group’s
second scenario analysis building on the extensive scenario analysis
conducted in 2021, to identify the resilience of the Group’s strategy
under three different possible climate change scenarios (global
warming of 1.5°C/2°C/3°C above pre-industrial levels by 2100)
and where possible were able to quantify the impact as material or
immaterial. In the instances where it was assessed as material, the
impact was assessed as long term, which is defined as more than
five years. Therefore, these impacts are currently not considered to
impact the conclusions made in our viability statement period.
A third-party company with expertise in TCFD was appointed to
assist with the analysis, and key management across the business
is engaged in the assessments made to date and going forward.
The key findings are summarised in the TCFD statement. While
environmental risk was added to our emerging risks register for the
first time in 2021, this has been addressed through the establishment
of the Sustainability and Public Policy Committee of the Board and
also through regular monitoring by the executive cross-functional
Environment Forum, as well as the Risk & Compliance Committee of
the Board. They are also considered as part of the Risk & Compliance
Committee’s biannual review of risks across the Group. The Board
is committed to continue to assess the situation and the financial
and other implications as quantification becomes possible over the
viability statement period and beyond.
Playtech plc Annual Report and Financial Statements 2022
91
Strategic Report Viability statement continued
Climate change impact continued
From a viability perspective, in the instances where we cannot yet
quantify the impact under each of the scenarios because of the lack
of data, this is considered in the overall reverse stress test analysis
(see below). Furthermore, we are closely monitoring how the risks
will progress over the next few years, meaning that we are already
trying to mitigate our potential exposure, and at this point in time are
comfortable that any climate change over the viability assessment
period will not impact the conclusions being made in our scenario
analysis below.
Scenario analysis
Two scenarios were applied to the base case as follows:
1.
2.
the stress-test scenario: encompass the principal and emerging
risks which were applied to the base case; and
the reverse stress-test scenario: to illustrate the Adjusted EBITDA
reduction required that could result in either a liquidity event or
breach of the bond covenant.
Under Scenario 1, the following risks were factored in:
• building a Sustainable Business (risk number 3) being the risk
of delays in launching in US and certain LatAm countries due to
regulation or competition; it was specifically considered because
even though it has been allocated a low likelihood, the impact could
be high; and
• complying with a changing landscape in legal, regulatory, licensing
and tax requirements (risk number 4) by considering the impact of
potential changes in taxes across some of our key markets (such
as Italy).
The impacts applied to this scenario were offset by potential savings
such as reducing capital expenditure. In this scenario, monthly
average decrease in Adjusted EBITDA was 20% over the five-year
period. Despite this, the Group was still able to meet its financial
covenants under its RCF until the point it is repaid, further noting
that the probability of all risks applied happening simultaneously is
considered remote.
Scenario 2 was specifically looked at because should we breach
the covenants under the RCF, the Group would have sufficient
funds to repay the outstanding balance. However, if we were to
breach the interest cover covenant under the bonds, which would
mean the bonds might subsequently be called for repayment, the
Group will not be able to repay without raising further finance. This
scenario indicated that Adjusted EBITDA would need to decrease
on average by 93% over the five-year period at each bank reporting
date for us to breach the covenant, noting that it did not consider
any mitigating actions the Board can take. The probability of this
scenario materialising is therefore considered remote, given the
excellent overall results in 2022 as discussed in the Chief Financial
Officer’s review.
Based on this assessment, the Directors have concluded that there
is a reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the five-year
period to 31 December 2027.
The Strategic Report on pages 2 to 92 was approved by the Board
and signed on its behalf by Mor Weizer and Chris McGinnis.
Mor Weizer
Chief Executive Officer
23 March 2023
Chris McGinnis
Chief Financial Officer
92 Playtech plc Annual Report and Financial Statements 2022
Strategic Report
Governance Report
Governance Report
94 Chairman’s introduction to governance
96 Board of Directors
98 Directors’ governance report
106 Audit Committee report
Remuneration Report
111 Statement by the Committee Chairman
115 Summary of Directors’ Remuneration Policy
119 Annual report on remuneration
129 Directors’ report
Playtech plc Annual Report and Financial Statements 2022
93
Governance Report Chairman’s introduction to governance
Progress driven by
responsibility and
sustainability
Dear Shareholder
In my capacity as Chairman of the Board, I am pleased to present
the Corporate Governance Report for 2022.
This year, Playtech and our industries have encountered many
challenges. From the war in Ukraine, rising cost of living, economic
downturn, continued impacts of climate change, political polarisation
and lasting impacts of the pandemic on employee working life and
wellbeing, coupled with increased regulatory and disclosure requirements,
have all had a profound effect on how business responds and
manages societal and environmental impacts and opportunities.
The Board continues to evolve to ensure that we have the necessary
skills and strategic leadership in order to continue to successfully
guide the Company. I would like to pass on my gratitude for the
hard work, resilience, enthusiasm and dedication which the
Directors, senior management and all employees demonstrated
throughout 2022.
After five years as Chief Financial Officer (CFO), Andrew Smith
stepped down from the Board in November 2022. Andrew contributed
significantly to Playtech’s strategy and helped guide the business
through a period of substantial transformation. Chis McGinnis was
appointed as CFO and as a Board member in November 2022, having
been previously Deputy CFO and Director of Investor Relations. Since
the start of 2023, we have also welcomed Samy Reeb to the Board as
a Non-executive Director and we are already reaping the benefits of
his broad skillset and extensive experience with global businesses.
One of my highest priorities when joining Playtech was to address the
balance and diversity of the Board. In 2022, we took a number of steps
to review and strengthen our approach to diversity and inclusion. The
Sustainability and Public Policy Committee reviewed and challenged
our overall strategy and performance whilst continuing to engage with
our external shareholder advisory panel on how best to strengthen our
overall approach to accelerate equality and equity in the workplace.
In addition, the Board approved a new Board Diversity Policy, which
codifies our commitment to make diversity a key factor as we review
the recruitment and succession at the Board. While we have made
significant progress, to include engaging recruitment consultants,
towards improving the Board’s gender diversity, there is still more
work to be done and we are actively taking steps towards meeting
our ambition of having a more diverse Board.
“ One of my highest priorities
when joining Playtech was
to address the balance and
diversity of the Board.”
Brian Mattingley
Chairman
94 Playtech plc Annual Report and Financial Statements 2022
Governance Report Central to Playtech’s progress and growth has been a track record
of open and constructive dialogue with its shareholders and 2022
has seen the Board continue high levels of engagement to ensure
important progress on corporate governance. We will continue to engage
with our shareholders to ensure that the Company’s interests are aligned
to the interests of all shareholders in the next period of our evolution.
The Board recognises the need to strike a careful balance to ensure
that shareholders and other stakeholders are appropriately protected
by robust processes and procedures, while providing an environment
that fosters an entrepreneurial spirit, thereby allowing our senior
management team and employees to continue to deliver the strategic
and operational progress that we have achieved in recent years.
This balance enables us to clearly focus on the key risks facing
the Group but requires us to be flexible enough to accommodate
changes resulting from developments in our strategy or changes
in the regulatory environment.
Playtech has grown rapidly since its inception and is now a company
with c.7,000 employees in 20 countries. To meet the changing
demands of the Company, the Board has also evolved significantly
in that time and has played an important role in guiding the Company
through its rapid change.
The Board has confidence in the future of the Group and sees
significant growth opportunities ahead. The operational progress
reported in 2022 in new and existing regulated markets, including
the US, is evidence of Playtech’s leadership in regulation and
compliance in the gambling industry, as well as our commercial
capabilities. The Board plays an essential role in upholding the highest
levels of regulation, compliance and responsibility and we continue
to work closely with regulators in various markets to ensure our
compliance with local laws and regulations. The Board continues
to strive to ensure that the Group’s governance structure protects
the sustainability of its businesses and the communities in which
it operates, while maximising shareholder value and treating all
shareholders fairly.
The Board also sets the tone for the Company. The way in which it
conducts itself, its attitude towards sustainability, problem gambling
and diversity and inclusion, its definitions of success and its assessment
of appropriate risk all define the atmosphere within which the executive
team works.
We have set out in the following sections how we seek to manage
the principal risks and uncertainties facing the business together
with further details on our governance framework, thereby explaining
how our corporate governance practices support our strategy.
The AGM is an important opportunity for the Board to meet with
shareholders, particularly those who may not otherwise have the
chance to engage with the Board and senior management. Our AGM
is scheduled to be held on 24 May 2023. Further details of the meeting
are included in the Notice of Annual General Meeting.
Brian Mattingley
Chairman
23 March 2023
Playtech plc Annual Report and Financial Statements 2022
95
Governance Report Board of Directors
Brian Mattingley
Non-executive Chairman
Mor Weizer
Chief Executive Officer
Chris McGinnis
Chief Financial Officer
Ian Penrose
Senior Independent
Non-executive Director
Appointment to the Board
Appointment to the Board
Appointment to the Board
Appointment to the Board
Brian was appointed to the Board
in June 2021.
Mor was appointed as Playtech’s
Chief Executive Officer in May 2007.
Career
Career
Brian joined 888 Holdings in 2005
as a Non-executive Director,
before being appointed CEO in
March 2012, and was Non-
executive Chairman from March
2016 until he stepped down in
2021. Prior to 888, Brian was CEO
of Gala Regional Developments,
and held senior roles with Gala
Group, Ritz Bingo, Kingfisher plc
and Dee Corporation plc.
Skills, competences and
experience
Brian brings considerable plc
board experience to the role, as
well as his extensive experience
in the gambling and leisure
industries.
Board Committees
N
Prior to being appointed CEO, Mor
was the Chief Executive Officer of
one of the Group’s subsidiaries,
Techplay Marketing Ltd., which
required him to oversee the
Group’s licensee relationship
management, product
management for new licensees
and the Group’s marketing
activities. Before joining Playtech,
Mor worked for Oracle for over
four years, initially as a
development consultant and then
as a product manager, which
involved creating sales and
consulting channels on behalf of
Oracle Israel and Oracle Europe,
the Middle East and Africa. Earlier
in his career, he worked in a variety
of roles, including as an auditor
and financial consultant for
PricewaterhouseCoopers and
a system analyst for Tadiran
Electronic Systems Limited, an
Israeli company that designs
electronic warfare systems.
Skills, competences and
experience
Mor is a qualified accountant and
brings a strong set of financial
skills together with considerable
international sales and management
experience in a hi-tech environment
and extensive knowledge of the
online gambling industry.
Chris was appointed as Playtech’s
Chief Financial Officer and an
Executive Director of the
Company on 28 November 2022,
having joined the Group in 2017.
Career
Chris started his career at Deloitte
in Canada where he qualified as
a Chartered Professional
Accountant (CPA). Chris then
worked in Equity Research for
UBS in Canada and Bank of
America Merrill Lynch in the UK.
Prior to being appointed CFO in
2022, Chris was Director of
Investor Relations. Prior to joining
Playtech, Chris was Head of
Corporate Strategy at software
company Temenos. Chris is also a
Chartered Financial Analyst (CFA)
charterholder.
Skills, competences and
experience
Chris is a strategic finance
executive with over twenty years’
experience across finance,
accounting, investor relations,
corporate strategy, M&A and
equity research board
committees.
A Audit Committee
E ESG Committee
N Nominations Committee
R Remuneration Committee
Ri
Risk Committee
Committee Chair
96 Playtech plc Annual Report and Financial Statements 2022
Ian was appointed to the Board
in September 2018.
Career
Ian is currently Non-executive
Director of ASX listed data
encryption, privacy and evaluation
business IXUP Limited, a
Non-executive Director of the
Chicago based streaming
technology business, Phenix Real
Time Solutions Inc., and a
Non-executive Director of
Weatherbys Limited, providing
technology solutions and
administrative functions to the
global horseracing industry
(together with its technology
partnership with the British
Horseracing Authority, Racing
Digital Ltd). Prior to his
appointment, Ian was CEO of
Sportech plc from 2005 to 2017
and served as CEO of Arena
Leisure plc from 2001 to 2005.
Last year, Ian retired as Chairman
of the National Football Museum,
having been a trustee for over
a decade.
Skills, competences and
experience
Ian brings 25 years of leadership
experience in the global gaming,
technology and sporting sectors.
In particular, he has significant
knowledge of the US, Canadian,
Australian and European markets,
having led strategic initiatives in
the regions during this time. Ian
has been licensed by regulators in
several countries and is also a
Chartered Accountant.
Board Committees
R A E Ri
Governance Report Anna Massion
Non-executive Director
John Krumins
Non-executive Director
Linda Marston-Weston
Non-executive Director
Samy Reeb
Non-executive Director
Appointment to the Board
Appointment to the Board
Appointment to the Board
Anna was appointed to the Board
in April 2019.
John was appointed to the Board
in April 2019.
Linda was appointed to the Board
in October 2021.
Career
Career
Career
Anna worked in investment
banking and asset management
for over 15 years and is widely
respected as a global gambling
industry expert. During her time at
PAR Capital Management, Anna
was responsible for idea
generation and portfolio
maintenance. Prior to joining PAR,
Anna held positions at leading
financial institutions including JP
Morgan, Marathon Asset
Management and Hedgeye Risk
Management. Anna is currently a
Non-executive Director of AGS
LLC, BetMakers Technology
Group Ltd, Artemis Strategic
Investment Corporation and
Gaming Realms plc.
Skills, competences and
experience
With Anna’s sector knowledge and
business network, she brings a
strong fiscal and analytical skillset
to the Board.
Board Committees
N R
Ri
John’s significant non-executive
experience includes his current
role, and previously at Hogg
Robinson Group plc and across a
series of private companies in the
IT, technology, med-tech and
related service sectors. In addition,
John is active across education
and currently a Trustee at Big
Education Trust. Prior to this, John
spent over 20 years in investment
banking as a Managing Director at
Morgan Stanley and subsequently
at both Deutsche Bank and
Societe Generale.
Skills, competences and
experience
John holds an MBA from the
Harvard Business School and
combines many years’ experience
in corporate finance, technology
and complex project management
together with prior plc board
experience and noteworthy
regulatory experience from his
previous role as a panel member of
the UK’s Competition and Markets
Authority from 2013 to 2018.
Board Committees
A E N Ri
Formerly a senior tax partner at
EY, Linda was a member of the EY
Midlands Board and Head of Tax
EY Midlands. Linda is passionate
about Diversity & Inclusion and
spent five years as EY’s Midlands
People partner, leading the
agenda across people matters.
She established a cross business
female mentoring network for the
Midlands region and set up and
continues to lead a female
entrepreneur’s network. Linda is
currently a Transaction Tax
partner and Head of Tax for the
Midlands at Cooper Parry.
Skills, competences and
experience
Linda is a Fellow of the Institute of
Chartered Accountants and brings
more than 30 years’ experience of
working with UK and Global
businesses and across corporate
finance, strategy, tax, culture and
leadership.
Board Committees
E A R
Appointment to the Board
Samy was appointed to the Board
in January 2023.
Career
Samy brings extensive experience
of working with global businesses
largely across wealth and tax
advisory. He began his career in
tax advisory at Ernst & Young and
tax management at Credit Suisse,
before focusing on wealth
advisory as an Executive Director
at Julius Baer, and subsequently
joining 1291 Group as Managing
Partner. Over the years, Samy
developed a leading franchise
advising on the financial affairs of
many Asia-based ultra-high net
worth clients.
Skills, competences and
experience
Samy’s broad skillset and
extensive knowledge of Asia
provides additional depth and
experience to the Board.
NOTE
Andrew Smith stepped down from his role as Chief Financial Officer and as an Executive Director on 28 November 2022.
Playtech plc Annual Report and Financial Statements 2022
97
Governance Report
Directors’ governance report
Introduction
Responsibility for corporate governance lies with the Board, which is
committed to maintaining high standards of corporate governance.
The report which follows explains our most important governance
processes and how they support the Group’s business. In particular,
we have applied the principles of good governance advocated by the
UK Corporate Governance Code 2018 (the “Code”) as published on
16 July 2018. The Code applied to Playtech throughout the financial
year ended 31 December 2022. A copy of the Code is available at
www.frc.org.uk. The Code places an emphasis on directors and
the companies they lead needing to build and maintain successful
relationships with a wide range of stakeholders. It also notes the
importance of a company establishing a culture that promotes
integrity and openness, values diversity and is responsive to the
views of shareholders and wider stakeholders.
UK Corporate Governance Code
The Code is applicable to all companies with a premium listing,
whether incorporated in the UK or elsewhere. The Code applies to
all accounting periods beginning on or after 1 January 2019.
The Board, supported by the secretary, should ensure that it has the
policies, processes, information, time and resources it needs in order
to function effectively and efficiently. See pages 99 to 105.
Section 3: Composition, succession and evaluation
Appointments to the Board should be subject to a formal rigorous and
transparent procedure, and an effective succession plan should be
maintained for the Board and senior management. Both appointments
and succession plans should be based on merit and objective criteria
and, within this context, should promote diversity of gender, social and
ethnic backgrounds, and cognitive and personal strengths. See pages
99 to 105.
The Board and its committees should have a combination of skills,
experience and knowledge. Consideration should be given to the
length of service of the Board as a whole and membership regularly
refreshed. See pages 99 to 105.
Annual evaluation of the Board should consider its composition and
diversity and how effectively members work together to achieve
objectives. Individual evaluation should demonstrate whether each
Director continues to contribute effectively. See page 104.
Section 1: Board leadership and company purpose
A successful company is led by an effective and entrepreneurial
board, whose role is to promote the long-term sustainable success
of the company, generating value for shareholders and contributing
to wider society. See pages 96 and 97.
Section 4: Audit, risk and internal control
The Board should establish formal and transparent policies and procedures
to ensure the independence and effectiveness of internal and external
audit functions and satisfy itself as to the integrity of financial and
narrative statements. See pages 99 to 105.
The Board should establish the Company’s purpose, values and
strategy, and satisfy itself that these and its culture are aligned. All
Directors must act with integrity and promote the desired culture.
Please refer to our Strategic Report as set out on pages 2 to 92.
The Board should ensure that the necessary resources are in place
for the Company to meet its objectives and measure performance
against them. The Board should establish a framework of prudent and
effective controls, which enable risk to be assessed and managed.
Details of our principal risks are set out in our Strategic Report on
pages 85 to 90.
In order for the Company to meet its responsibilities to shareholders
and stakeholders, the Board should ensure effective engagement
with, and encourage participation from, these parties. Please refer
to details of our relationships with stakeholders on pages 43 to 45.
The Board should ensure that workforce policies and practices are
consistent with the Company’s values and support its long-term
sustainable success. The workforce should be able to raise any
matters of concern. Our Strategic Report on pages 2 to 92 gives detail
of our values and how we integrate these into our corporate culture
which, in turn, leads to engagement with the wider workforce.
Section 2: Division of responsibilities
The Chair leads the Board and is responsible for its overall
effectiveness in directing the Company. The Directors should
demonstrate objective judgement throughout their tenure and
promote a culture of openness and debate. In addition, the Chair
facilitates constructive Board relations and the effective contribution
of all Non-executive Directors, and ensures that Directors receive
accurate, timely and clear information. See pages 99 to 105.
The Board should include an appropriate combination of Executive
and Non-executive (and, in particular, Independent Non-executive)
Directors, such that no one individual or small group of individuals
dominates the Board’s decision making. There should be a clear
division of responsibilities between the leadership of the Board and
the executive leadership of the Company’s business. See pages
99 to 105.
Non-executive Directors should have sufficient time to meet their
Board responsibilities. They should provide constructive challenge
and strategic guidance, offer specialist advice and hold management
to account. See pages 99 to 105.
98 Playtech plc Annual Report and Financial Statements 2022
The Board should present a fair, balanced and understandable
assessment of the Company’s position and prospects. Our Strategic
Report is on pages 2 to 92.
The Board should establish procedures to manage risk, oversee the
internal control framework, and determine the nature and extent of
the principal risks the Company is willing to take in order to achieve
its long-term strategic objectives. Details of our principal risks are set
out on pages 85 to 90. In addition, our Risk & Compliance Committee
Report is set out on page 102.
Section 5: Remuneration
Remuneration policies and practices should be designed to support
strategy and promote long-term sustainable success. Executive
remuneration should be aligned to Company purpose and values
and be clearly linked to the successful delivery of the Company’s
long-term strategy.
A formal and transparent procedure for developing policy on executive
remuneration and determining Director and senior management
remuneration should be established. No Director should be involved
in deciding their own remuneration outcome.
Directors should exercise independent judgement and discretion
when authorising remuneration outcomes, taking account of
Company and individual performance, and wider circumstances.
Details of our Remuneration Policy and how it is applied are set out
in the Governance section on pages 111 to 128.
Compliance statement
We continued to make improvements during the year both to our
Board structure and our governance procedures in accordance with
the provisions of the Code. In accordance with provision 38 of the
Code, and in keeping with our Remuneration Policy as approved by
shareholders at our Annual General Meeting held in May 2021, we
reached a position in January 2023 whereby pension contributions to
our Executive Directors are aligned with pension contribution to our
wider workforce. I am pleased to be able to report that it is the view of
the Board that the Company is now fully compliant with the principles
of the Code.
Governance Report Following the results on our AGM held in June 2022, the Board noted
in its announcement dated 30 June 2022 that certain resolutions
were passed with the necessary majority but received less than
80% of votes in favour. These resolutions were in respect of the
Remuneration Report and disapplication of pre-emption rights. We
explained at that time that we aspire to high levels of shareholder and
stakeholder engagement and would consult with those shareholders
who voted against these resolutions to understand their specific
concerns. Since the AGM, we have held regular discussions with
our shareholders to hear their views and better understand their
concerns. Our Sustainability and Public Policy Committee continues
to steer Playtech towards stronger governance around sustainability.
A statement setting out our response to the voting figures from last
year’s AGM was uploaded to the Investment Association portal.
In accordance with the principles of the Code, we are focused on
engaging with our workforce. Full details of how we engage with
our employees are set out in our Strategic Report, Stakeholder
Engagement on pages 43 to 45. In addition, our Chief Operating
Officer and our Head of Human Resources engage with the Board
on strategic and operational issues affecting and of interest to our
workforce. These issues include remuneration, talent pipeline,
wellbeing and diversity and inclusion. The Chief Operating Officer is a
standing attendee at Board meetings. We believe that these methods
of engagement with our workforce are extensive and very effective
and meet the requirements of the Code. During the year, the Board
continued with a review of our current arrangements with a view to
enhancing its engagement with the workforce including arrangements
to appoint a Non-executive Director for workforce engagement at
Board level.
We announced on 21 February 2022 that the Board was notified
by our Chief Executive Officer, Mor Weizer, that he wished to
explore participating in the investor group formed and advised by
TTB Partners Limited (TTB) in considering a possible offer for the
Company. The Board formed an Independent Committee consisting
of the Playtech Directors excluding Mor Weizer to consider all matters
relating to any possible offer from TTB and any other M&A proposals
received by the Company. The Independent Committee was
especially mindful of its obligations to Playtech stakeholders and the
requirements of the Code. On 14 July 2022, TTB advised that it did not
intend to make an offer for the Company due to challenging underlying
market conditions.
Ian Penrose was appointed as Chair of the Remuneration Committee
on 1 November 2018, having been appointed as a member of the
Committee on 1 September 2018. Notwithstanding that he had not
been a member of the Committee for at least 12 months prior to his
appointment as Chair, his extensive experience in the plc environment
made him the most appropriate person for the role. Ian has now served
as Chair for over 4 years.
The Company’s auditor, BDO LLP, is required to review whether the
above statement reflects the Company’s compliance with the Code
by the Listing Rules of the Financial Conduct Authority and to report
if it does not reflect such compliance. No such negative report has
been made.
The Board is accountable to the Company’s shareholders for good
governance and the statements set out in this report describe how the
Group applies the principles identified in the Code.
The Board
Composition
As at 31 December 2022, the Board comprised the Non-executive
Chairman, the Chief Executive Officer, the Chief Financial Officer,
and four independent Non-executive Directors. The list of Directors
holding office during the year to 31 December 2022 and their
responsibilities are set out on pages 96 and 97.
With the exception of Andrew Smith, who stepped down in November
2022 and Chris McGinnis, who was appointed in November 2022 the
Directors served throughout the financial year.
Samy Reeb was appointed as a Non-executive Director in January 2023.
The Non-executive Directors are all considered by the Board to be
independent of management and free of any relationship which could
materially interfere with the exercise of their independent judgement,
as explained above.
The Company Secretary acts as secretary to the Board and its
Committees and his appointment and removal is a matter for the
Board as a whole. The Company Secretary is a member of the Group’s
management team and all the Directors have access to his advice and
services.
Director’s name
Title
Brian Mattingley
Non-executive Chairman
Mor Weizer
Chris McGinnis
Ian Penrose
Executive Director, Chief
Executive Officer
Executive Director, Chief Financial Officer
(Appointed 28 November 2022)
Non-executive Director – Senior
Independent Director
Anna Massion
Non-executive Director
John Krumins
Non-executive Director
Linda Marston-Weston
Non-executive Director
Samy Reeb
Andrew Smith
Non-executive Director (from
4 January 2023)
Executive Director, Chief Financial
Officer (from 1 January 2022 to
28 November 2022)
Board operation
The roles of the Chairman (Brian Mattingley) and the Chief Executive
Officer (Mor Weizer) are separated and clearly defined and their
respective responsibilities are summarised below.
Chairman
• Overall effectiveness of the running of the Board
• Ensuring the Board is an integral part in the development
and determination of the Group’s strategic objectives
• Keeping the other Directors informed of shareholders’ attitudes
towards the Company
• Safeguarding the good reputation of the Company and
representing it both externally and internally
• Acting as the guardian of the Board’s decision-making processes
• Promoting the highest standards of integrity, probity and corporate
governance throughout the Company and particularly at
Board level
Playtech plc Annual Report and Financial Statements 2022
99
Governance Report The Board continued
Board operation continued
Chief Executive Officer
• Executive leadership of the Company’s business on a
day-to-day basis
• Developing the overall commercial objectives of the Group and
proposing and developing the strategy of the Group in conjunction
with the Board as a whole
• Responsibility, together with his senior management team, for
the execution of the Group’s strategy and implementation of
Board decisions
• Recommendations on senior appointments and development of
the management team
• Ensuring that the affairs of the Group are conducted with the
highest standards of integrity, probity and corporate governance
How the Board functions
In accordance with the Code, the Board is collectively responsible
for the long-term success of the Company. The Board provides
entrepreneurial leadership for the Company within a framework
of prudent and effective controls that enable risk to be assessed
and managed.
The Board sets the Company’s strategic aims and ensures that
the necessary resources are in place for the Company to meet its
objectives and reviews management performance.
The Board meets regularly and frequently, with 13 meetings scheduled
and held in 2022, of which two were held remotely. In addition, the
Board held several informal calls throughout the year.
During the year, the Chairman met the other Non-executive Directors
both in person and remotely, in the absence of the Executive Directors, to re-
confirm and take account of their views. All Non-executive Directors
have sufficient time to fulfil their commitments to the Company.
In addition to receiving reports from the Board’s Committees,
reviewing the financial and operational performance of the Group
and receiving regular reports on M&A, legal, regulatory and investor
relations matters at the Board meetings, the other key matters
considered by the Board during 2022 are set out in the table to the left.
Directors are provided with comprehensive background information
for each meeting and all Directors were available to participate fully
and on an informed basis in Board decisions. In addition, certain
members of the senior management team including the Chief
Operating Officer, the General Counsel, the Head of Regulatory
and Compliance, the Director of Investor Relations and the Director
of Corporate Affairs are invited to attend the whole or parts of the
meetings to deliver their reports on the business. Any specific actions
arising during meetings are agreed by the Board and a comprehensive
follow-up procedure ensures their completion.
Details of the attendance of the Directors at meetings of the Board
and its Committees are set out in the table on page 101.
Directors’ governance report continued
100 Playtech plc Annual Report and Financial Statements 2022
Matters considered by the Board in 2022MonthMaterial matters consideredJanuary• Review of Holland Casino and Caliente• Review of LATAM business • Aristocrat Offer• UkraineFebruary• Finalto Sale• Aristocrat Offer• Review of LATAM business • Review of Tax Strategy • UkraineMarch • Report from the Audit Committee• Financial statements for 31 December 2021• Preliminary announcement• TTB Offer • UkraineApril• TTB Offer • Trading Update• Finalto Sale • UkraineMay• Bond Renewal • Ukraine • Review of LATAM Business • Finalto SaleJune• Prepare for AGM • Review of Five-year Plan• Review of Long Term Incentive Plan • Review of RCFAugust• Review of LATAM Business• Update on Interim Review • Update on Bond Renewal• Review of Asian Business • Investor Relations Update September• Report from the Audit Committee• Interim Results & Presentation• Update from Management MeetingOctober• M&A Update • Investor Relations Update • RCF Update November• Review of Snaitech Business• Budget 2023• New ProjectsDecember• Budget 2023Governance Report Responsibility and delegation
The Chairman is primarily responsible for the efficient functioning of
the Board. He ensures that all Directors receive sufficient relevant
information on financial, operational and corporate issues prior to
meetings. The Chief Executive Officer’s responsibilities focus on
co-ordinating the Group’s business and implementing Group strategy.
Regular interaction between the Chairman and Chief Executive Officer
between meetings ensures the Board remains fully informed of
developments in the business at all times.
There remains in place a formal schedule of matters specifically
reserved for Board consideration and approval, which includes the
matters set out below:
• approval of the Group’s long-term objectives and commercial strategy;
• approval of the annual operating and capital expenditure budgets
and any changes to them;
• consideration of major investments or capital projects;
• the extension of the Group’s activities into any new business or
geographic areas, or to cease any material operations;
• changes in the Company’s capital structure or management and
control structure;
• approval of the Annual Report and Accounts, preliminary and half-yearly
financial statements and announcements regarding dividends;
• approval of treasury policies, including foreign currency exposures
and use of financial derivatives;
The Board has delegated certain of its responsibilities to a number
of Committees of the Board to assist in the discharge of its duties.
The principal Committees currently are the Audit Committee, the
Remuneration Committee, the Risk & Compliance Committee, the
Nominations Committee and the Sustainability and Public Policy
Committee (the “ESG Committee”). The minutes of each of these
Committees are circulated to and reviewed by their members. The
Company Secretary is secretary to each of these Committees. The
terms of reference for each of the Committees are available to view
on the Company’s website www.playtech.com.
Audit Committee
The Audit Committee’s key objectives are the provision of effective
governance over the appropriateness of the Group’s financial
reporting, including the adequacy of related disclosures, the
performance of both the internal and external audit function, and the
management of the Group’s systems of internal control, business risks
and related compliance activities.
The Audit Committee’s Report is set out on pages 106 to 110 and
details the Audit Committee’s membership, activities during the
year, significant issues that it considered in relation to the financial
statements and how those issues were addressed. The report
also contains an explanation of how the Committee assessed the
effectiveness of the external audit process and the approach taken in
relation to the appointment or reappointment of the external auditor.
The Audit Committee comprises John Krumins (Chairman), Ian
Penrose and Linda Marston-Weston.
• ensuring the maintenance of a sound system of internal control and
Remuneration Committee
risk management;
• entering into agreements that are not in the ordinary course of
business or material strategically or by reason of their size;
• changes to the size, composition or structure of the Board and its
Committees; and
• corporate governance matters.
In addition, the Board has adopted a formal delegation of authorities
memorandum which sets out levels of authority for employees in
the business.
The Remuneration Committee is responsible for making
recommendations to the Board on the Remuneration Policy for
the Chairman, Executive Directors and senior management.
The Directors’ Remuneration Report is set out on pages 119 to 128
and contains details of the Remuneration Committee’s membership,
activities during the year and the policy on remuneration. The
Chairman of the Remuneration Committee attends the Annual
General Meeting to respond to any questions that shareholders might
raise on the Remuneration Committee’s activities.
The Remuneration Committee comprises Ian Penrose (Chairman),
Anna Massion and Linda Marston-Weston.
Playtech plc Annual Report and Financial Statements 2022
101
Number of meetingsBoardAuditRemunerationNominationsRiskESGBrian Mattingley13 of 13 ——1 of 1——Mor Weizer13 of 13 —————Chris McGinnis13 of 3 —————Ian Penrose13 of 13 6 of 6 5 of 5— 4 of 4 6 of 6 Anna Massion13 of 13 — 5 of 5 1 of 14 of 4—John Krumins 13 of 13 6 of 6—1 of 14 of 4 6 of 6Linda Marston-Weston13 of 13 6 of 6 5 of 5 ——6 of 6 Andrew Smith210 of 10 — —— — —1 Chris McGinnis was appointed on 28 November 2022.2 Andrew Smith resigned on 28 November 2022.Governance Report Directors’ governance report continued
Risk & Compliance Committee
Under the Code, the Board is responsible for determining the nature
and extent of the significant risks it is willing to accept in achieving
its long-term strategic objectives. Through its role in monitoring the
ongoing risks across the business, to include the Group risk register,
the Committee advises the Board on current and future risk strategies.
The Risk & Compliance Committee is chaired by Anna Massion. The
other members of the Committee are John Krumins (Non-executive
Director) and Ian Penrose (Senior Independent Non-executive Director).
Ian Ince (Chief Compliance Officer), Alex Latner (General Counsel),
Steffen Latussek (Chief Privacy Officer) and Robert Penfold (Head of
Internal Audit) attend the Committee. The Company Secretary, Brian
Moore, is secretary to the Committee.
The Committee works closely with the Audit Committee in carrying
out its responsibilities and the Chairman of the Audit Committee, John
Krumins, is also a member of the Committee.
In addition, PwC LLP, in its capacity as provider of co-sourced internal
audit services, and members of the Group’s senior management
including the Chief Security Officer, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer, Head of Internal Audit and
Data Protection Officer may be invited to attend meetings to present
matters or for the Committee to have the benefit of their experience.
The primary responsibilities delegated to, and discharged by, the
Committee include:
• reviewing management’s identification and mitigation of key risks
to the achievement of the Company’s objectives;
• monitoring of incidents and remedial activity;
• agreeing and monitoring the risk assessment programme including
changes to the regulation of online gambling and the assessment
of licensees’ suitability;
• agreeing on behalf of the Board and continually reviewing a risk
management strategy and relevant policies for the Group, including
the employee code of conduct, anti-bribery policy, anti-money
laundering policy, anti-slavery policy, safer gambling and wider
social responsibility issues;
• satisfying itself and reporting to the Board that the structures,
processes and responsibilities for identifying and managing risks
are adequate; and
• monitoring ongoing compliance with the conditions of the
regulatory licences held by the Group.
The Risk & Compliance Committee met formally four times during the
year, and a summary of the key matters considered by the Committee
during 2022 are set out below:
• monitoring the regulatory position in a number of jurisdictions
including those which are of relative importance to the Group
financially and those where changes may represent a risk and/or
opportunity for the Group;
• considering the costs and regulatory requirements for the Group
to seek relevant licences in newly regulating markets;
• consideration of applications by or on behalf of the Group for
licences in existing or newly regulated markets;
• monitoring developments in relation to changes in the regulatory
regimes in all jurisdictions in which the Group operates and
receiving reports in relation to the likely impact on the Group
and the need for entities within the Group to apply for licences;
• consideration of the overall effectiveness of the compliance
strategy and the regulatory risks to the Group’s operations
and revenues;
102 Playtech plc Annual Report and Financial Statements 2022
• receiving and considering reports on discussions with,
and the results of, audits by regulators;
• monitoring compliance with regulatory licences held in all jurisdictions
and adapting procedures, products and technology as appropriate;
• consideration of the key risks associated with Snaitech;
• consideration of the key risks associated with our B2C business;
• monitoring the GDPR programme across the Group and reviewing
this programme, as appropriate;
• working with Internal Audit and IT Security; and
•
implementing compliance training for Board members and
senior management.
The Committee has been kept informed of any changes to the
regulatory position in any significant jurisdiction where the Group,
through its licensees and Financials division, may be exposed and
updated on progress in relation to agreed action items on a regular
basis. The Committee can also convene meetings on a more frequent
basis or as or when matters arise, if it is determined that enhanced
monitoring of a specific risk is warranted.
A table setting out the principal significant risks identified by the Group
(including with the oversight and input of the Risk & Compliance
Committee) and the mitigating actions that have been undertaken by
the Group in relation to these is set out on pages 85 to 90 of this report.
Nominations Committee
The Board is required by the Code to establish a Nominations Committee
which should lead the process for Board appointments, ensure
plans are in place for orderly succession to both Board and senior
management positions and oversee the development of a diverse
pipeline for succession. A majority of members of the Nominations
Committee should be independent Non-executive Directors. The
Nominations Committee’s key objective is to ensure that there shall
be a rigorous and transparent process for the appointment and
removal of Directors from the Board, the Committees and other senior
management roles, to ensure that these roles are filled by individuals
with the necessary skills, knowledge and experience to ensure that
they are effective in discharging their responsibilities.
The Nominations Committee comprises Brian Mattingley (Chairman),
Anna Massion and John Krumins.
The Nominations Committee reviews the structure, size and composition
of the Board and its Committees and makes recommendations with
regard to any changes considered necessary in the identification and
nomination of new Directors, the reappointment of existing Directors
and the appointment of members to the Board’s Committees. It also
assesses the roles of the existing Directors in office to ensure that
there continues to be a balanced Board in terms of skills, knowledge,
experience and diversity. The Nominations Committee reviews
the senior leadership needs of the Group to enable it to compete
effectively in the marketplace. The Nominations Committee
also advises the Board on succession planning for Executive
Director appointments although the Board itself is responsible
for succession generally.
The Nominations Committee believes that appointments should
be based on merit, compared against objective criteria, with the
ultimate aim of ensuring the Board has the right skills, knowledge and
experience that enable it to discharge its responsibilities properly.
Diversity and inclusion are part of our corporate culture and we have
set ourselves objectives around improving the gender balance at
Board, executive and senior management levels. We recognise that
it will take time to make meaningful progress but, with increasing
commitment in this area, we will pursue diversity and inclusion
objectives as set out in our Strategic Report on pages 2 to 92.
Governance Report The Nominations Committee meets on an as-needed basis. One
formal meeting was held in 2022. Matters considered at this meeting
included the consideration of candidates for appointment as a Non-
executive Director. This led to the appointment of Samy Reeb with
effect from January 2023.
Sustainability and Public Policy Committee
The Committee is chaired by Linda Marston-Weston and the other
Committee members are Ian Penrose and John Krumins. In addition,
we established a Stakeholder Advisory Panel to inform and challenge
our thinking and inform our approach to sustainability as well as
future actions on safer gambling and diversity, equity and inclusion,
as well as climate change. The Stakeholder Advisory Panel has
played an instrumental role in accelerating Playtech’s journey towards
sustainability into its business strategy and culture.
We have undergone an extensive exercise to better understand how
climate change could pose risks and opportunities for the Company in
the short and long term. This exercise has been critical to help inform
Playtech’s climate action plan and will play a crucial role in meeting the
Company’s targets relating to emissions reduction in its operations
and value chain.
We have also refreshed our approach to promoting diversity, equity
and inclusion across our leadership and workforce. Playtech
continues to operate in numerous countries, each with their own
distinct cultures. Our aim continues to focus on each individual and
celebrate the difference and cultural diversity of our workforce.
We will continue to report against our targets going forward.
Disclosure Committee
The Disclosure Committee ensures accuracy and timeliness of
public announcements of the Company and monitors the Company’s
obligations under the Listing Rules and Disclosure Guidance and
Transparency Rules of the FCA. Meetings are held as required. At
the date of this report the Disclosure Committee comprises John
Krumins (Chairman of the Audit Committee), Chris McGinnis (Chief
Financial Officer), Alex Latner (General Counsel) and Brian Moore
(Company Secretary).
Management Committee
The senior management committee is the key management
committee for the Group. The standing members of the Committee
are Mor Weizer (Chief Executive Officer), Chris McGinnis (Chief
Financial Officer), Shimon Akad (Chief Operating Officer), Uri Levy
(VP Business Development), Alex Latner (General Counsel), Ian Ince
(Chief Compliance Officer), Sharon Kafman-Raz (VP Finance), Kam
Sanghera (Head of Tax), Karen Zammit (Head of Global HR), Lauren
Iannarone (Chief Sustainability & Corporate Affairs Officer) and Brian
Moore (Company Secretary). Other members of senior management
are invited to the Committee as and when required. The Committee
considers and discusses plans and recommendations coming from
the operational side of the business and from the various product
verticals, in light of the Group’s strategy and capital expenditure and
investment budgets, including the implications of those plans (in areas
such as resources, budget, legal and compliance). The Committee
either approves the plans or as necessary refers the proposal for
formal Board review and approval in accordance with the Company’s
formal matters reserved for the Board.
Board tenure
In accordance with the Company’s articles of association, every new
Director appointed in the year is required to stand for re-election by
shareholders at the Annual General Meeting (AGM) following their
appointment. Also, under the articles of association, at each AGM
one-third of the Directors (excluding any Director who has been
appointed by the Board since the previous AGM) or, if their number is
not an integral multiple of three, the number nearest to one-third but
not exceeding one-third, shall retire from office (but so that if there are
fewer than three Directors who are subject to retirement by rotation
under the articles one shall retire).
Notwithstanding the provisions of the articles of association, the
Board has decided to comply with the Code requirements that
Directors submit themselves for re-election annually. Therefore, all
Directors are seeking their reappointment at this year’s AGM.
The Board has collectively agreed that the Directors proposed for
re-election at this year’s AGM have made significant contributions
to the business since their last re-election and each has a key role to
play in the formulation of the Group’s future strategy and its long-term
sustainable success.
In certain circumstances, Directors are entitled to seek independent
professional advice under an agreed Board procedure, which would
then be organised by the Company Secretary, and in this regard the
Company would meet their reasonable legal expenses.
Service contracts and exit payments
Executive Directors
Set out in the table below are the key terms of the Executive Directors’
terms and conditions of employment.
A bonus is not ordinarily payable unless the individual is employed and
not under notice on the payment date. However, the Remuneration
Committee may exercise its discretion to award a bonus payment
pro-rata for the notice period served in active employment (and not on
gardening leave).
The LTIP rules provide that other than in certain “good leaver”
circumstances awards lapse on cessation of employment. Where an
individual is a “good leaver” the award would vest on the normal vesting
date (or cessation of employment in the event of death) following the
application of performance targets and a pro-rata reduction to take
account of the proportion of the vesting period that has elapsed. The
Committee has discretion to partly or completely disapply pro-rating
or to permit awards to vest on cessation of employment.
Provision
Detail
Remuneration
Salary, bonus, LTIP, benefits and pension
entitlements in line with the above Directors’
Remuneration Policy table
Change of
control
No special contractual provisions apply in the
event of a change of control
Notice period
12 months’ notice from the Company or employee
for the CEO and the CFO
• CEO contract signed on 1 January 2013
• CFO contract signed on 28 November 2022
The Company may make a payment in lieu of
notice equal to basic salary plus benefits for the
period of notice served subject to mitigation and
phase payments where appropriate
During employment and for 12 months thereafter
Termination
payment
Restrictive
covenants
Playtech plc Annual Report and Financial Statements 2022
103
Governance Report Directors’ governance report continued
Service contracts and exit payments continued
Balance of the Board
Non-executive Directors
The Non-executive Directors each have specific letters of
appointment, rather than service contracts. Their remuneration
is determined by the Board within limits set by the articles of
association and is set taking into account market data as obtained
from independent Non-executive Director fee surveys and their
responsibilities. Non-executive Directors are appointed for an initial
term of three years and, under normal circumstances, would be
expected to serve for additional three-year terms, up to a maximum
of nine years, subject to satisfactory performance and re-election
at the Annual General Meeting as required.
The table below is a summary of the key terms of the letters of
appointment for the Non-executive Directors.
The letters of appointment of the Non-executive Directors are available
for inspection at the Company’s registered office and will be available
before and after the forthcoming AGM.
The Board comprises individuals with wide business experience
gained in various industry sectors related to the Group’s current
business. It is the intention of the Board to ensure that the balance
of the Directors reflects the changing needs of the business.
The Board considers that it is of a size and has the balance of skills,
knowledge, experience and independence that is appropriate for the
Group’s current business. While not having a specific policy regarding
the constitution and balance of the Board, potential new Directors are
considered on their own merits with regard to their skills, knowledge,
experience and credentials.
The Non-executive Directors continue to contribute their considerable
collective experience and wide-ranging skills to the Board and provide
a valuable independent perspective, where necessary constructively
challenging proposals, policy and practices of Executive Management.
In addition, they help formulate the Group’s strategy.
Name
Date
Term
Termination
Brian Mattingley
1 June 2021
Until third AGM after appointment
180 days’ notice on either side or if not re-
elected or commits gross misconduct
Linda Marston-Weston
1 October 2021
Ian Penrose
1 September 2018
Anna Massion
2 April 2019
John Krumins
2 April 2019
Samy Reeb
4 January 2023
Until third AGM after appointment unless
not re-elected
Until third AGM after appointment unless
not re-elected
Until third AGM after appointment unless
not re-elected
Until third AGM after appointment unless
not re-elected
Until third AGM after appointment unless
not re-elected
90 days’ notice on either side or if not
re-elected, disqualification or commits
gross misconduct
Evaluation
The Board is committed to an ongoing formal and rigorous evaluation
process of itself and its Committees to assess their performance and
identify areas in which their effectiveness, policies and processes
might be enhanced. Brian Mattingley, in discussion with the Senior
Non-executive Director, undertook a review of the performance of
individual Directors. Ian Penrose, as Senior Non-executive Director,
considered the performance of Brian Mattingley, taking into account
the views of the Executive Directors. There were no material areas of
concern highlighted and the main outcome of the evaluation this year
was to shape and define the Board’s objectives for the coming year,
continuing the focus on Group strategy and ensuring the structures,
capabilities and reporting are in place to achieve the Board’s goals.
As stated in last year’s Annual Report, the Board was required to carry
out a full external review in 2021, This review commenced in late 2021
and continued into 2022. This review is facilitated by Independent
Audit Limited. Independent Audit Limited has no other connection
to the Company or any individual Director and is considered by the
Board to be independent.
This review involved detailed questionnaires, individual interviews
with Directors and members of senior management and attendance
at Board and Committee meetings. The process was overseen by the
Company Secretary. In addition, the Company Secretary is the person
responsible for providing access and support for Independent Audit
Limited. The review has been finalised and is with the Chairman. The
Board members will discuss the findings and continue to adopt and
implement plans to further develop the effectiveness of the Board
during 2023.
Newly appointed Directors can expect a detailed and systematic
induction on joining the Board. They meet various members of senior
management and familiarise themselves with all core aspects of the
Group’s operations. On request, meetings can be arranged with major
shareholders. Members of senior management are invited to attend
Board meetings from time to time to present on specific areas of the
Group’s business.
Relationship with stakeholders
Primary responsibility for effective communication with shareholders
lies with the Chairman, but all the Company’s Directors are available
to meet with shareholders throughout the year. Brian Mattingley,
Mor Weizer, Andrew Smith, Chris McGinnis and Ian Penrose met
with a number of shareholders to discuss the Company’s business
and remuneration strategies throughout the year. The Executive
Directors prepare a general presentation for analysts and institutional
shareholders following the interim and full-year announcements.
Details of these presentations together with the Group’s financial
statements and other announcements can be found on the investor
relations section of the Company’s website. Further presentations are
also prepared following significant acquisitions. Regular meetings with
shareholders and potential shareholders are also held by the Director
of Investor Relations and at times in conjunction with either the Chief
Executive Officer or the Chief Financial Officer.
The Company endeavours to answer all queries raised by
shareholders promptly.
Shareholders are encouraged to participate in the Company’s AGM
and the 2023 AGM will take place on 24 May 2023.
104 Playtech plc Annual Report and Financial Statements 2022
Governance Report Playtech regularly engages with a wide range of stakeholders
throughout the year with the objective of understanding current
and evolving issues of interest, engaging constructively with our
stakeholders, and ensuring that the Company takes stakeholder
perspectives into account when taking short and long-term decisions.
The Board uses several mechanisms and fora to achieve this including:
• direct engagement with stakeholders – including investor
roadshows and regulatory meetings;
• regular Board updates from key functional leaders responsible
for engaging with key external stakeholders including the Chief
Operations Officer (COO), Investor Relations, Data Protection,
Corporate Affairs and Regulatory and Compliance;
• relevant functional reports and updates to the Remuneration,
Audit and Risk & Compliance Board Committees;
• regular Board updates from the COO and HR on employee issues;
• briefings with functional leaders about emerging and/or live
stakeholder issues;
• briefings on issues raised through the Speak Up/Whistleblowing
hotline; and
• direct participation of the Risk & Compliance Committee Chair in
the Company’s Global Community Investment Committee.
The Director of Investor Relations & Strategic Analysis, Chief
Operating Officer and Chief Compliance Officer are standing
attendees at Board meetings and regularly update the Board on
investor, regulatory, policy, employee and commercial stakeholder
views and perspectives.
In addition, the Risk & Compliance Committee of the Board is
specifically tasked with reviewing and considering developments on
wider social responsibility issues and expectations along with evolving
political, regulatory and compliance developments.
With respect to employee engagement, the Board engages with
the COO and Global Head of Human Resources on strategic and
operational issues affecting and of interest to the workforce, including
remuneration, talent pipeline and diversity and inclusion. The COO is
a standing attendee at the Board meetings. In addition, the Company
has established a Speak Up hotline, which enables employees to
raise concerns confidentially and independently of management.
Any concerns raised are reported to the General Counsel and
Chief Compliance Officer for discussion and consideration by the
Risk Committee. The Board considers the current mechanisms
appropriate for understanding and factoring in stakeholder concerns
into plc level decision making. However, the Board will assess whether
additional mechanisms can strengthen its understanding of and
engagement with stakeholder concerns in the future.
During 2022, the Board discussed, reviewed and engaged on a
number of stakeholder issues. The material stakeholder topics
discussed by the Board in 2022 included executive compensation
and pay, corporate governance, diversity and inclusion, the gender
pay gap, regulatory and compliance developments, safer gambling,
data protection, the environment, sustainability, anti-money
laundering and anti-bribery and corruption, human rights and modern
slavery, responsible supply chain and procurement and commercial
developments with B2B licensees and third parties.
In 2022, the Board considered the engagement and understanding
of stakeholder interests and perspectives through the implementation
of the following:
• new and updated policies covering the Compliance Procurement
Policy, human rights and the modern slavery statement;
• approval of Speak Up Policy;
• approval of Environmental Policy;
• approval of Business Ethics Policy; and
• monitoring developments on the Human Resources function
and strategy.
Investor relations and communications
The Company has well-established investor relations (IR) processes,
which support a structured programme of communications with
existing and potential investors and analysts. Executive Directors and
members of the IR team participated in a number of investor events,
attending industry conferences, and regularly meet or are in contact
with existing and potential institutional investors from around the
world, ensuring that Group performance and strategy are effectively
communicated, within regulatory constraints. Other representatives
of the Board and senior management meet with investors from time to
time. The Director of Investor Relations & Strategic Analysis provides
regular reports to the Board on related matters, issues of concern to
investors, and analysts’ views and opinions.
Whenever required, the Executive Directors and the Chairman
communicate with the Company’s brokers, Goodbody and
Jefferies, to confirm shareholder sentiment and to consult on
governance issues.
During 2022, 1192 regulatory announcements were released
informing the market of corporate actions, important customer
contracts, financial results, the results of the Annual General
Meeting, the General Meeting and Board changes. Copies of these
announcements, together with other IR information and documents,
are available on the Group website, www.playtech.com.
Summary
An internal team consisting of members drawn from Investor
Relations, Group Secretariat and Group Finance have led the process
on this Annual Report, to include the Strategic Report, Governance
Report and financial statements contained therein. When considering
the contents of the Report, the Board considered if the information
by business unit in the Strategic Report is consistent with that used
for reporting in the financial statements and if there is an appropriate
level of consistency between the front and back sections of the
report. In addition, the Board considered if the report is presented
in a user-friendly and easy to understand manner. Following its
review, the Board is of the opinion that the Annual Report and
Financial Statements for 31 December 2022 are representative of
the year and is confident that taken as a whole it is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Group’s position, performance, business
model and strategy.
Brian Mattingley
Chairman
23 March 2023
Playtech plc Annual Report and Financial Statements 2022
105
Governance Report Audit Committee report
Maintaining oversight
and accountability
Dear Shareholder
Introduction
As Chairman of the Audit Committee, I am pleased to present our
Report for the year ended 31 December 2022, setting out how the
responsibilities delegated to us by the Board were discharged over
the course of the year, the key topics we considered and some of the
additional factors which influenced our work.
2022 has been a particularly challenging year for Playtech featuring
changes to both the scope and emphasis of our business model, and
significant operational disruption in Ukraine, which together have
tested the strength and resilience of our financial, risk management
and control processes. The year saw great expansion and success
in the Group’s activities in both North and South America, which will
increasingly be key contributors to overall performance requiring
the Committee to realign its focus accordingly. While at the same
time, the Group has rallied to support its employees in Kyiv and to
ensure that customers served from our Ukrainian operations have
not experienced any performance impact.
Whilst we anticipate continued uncertainty with respect to the post-
COVID-19 macro-economic environment and resolution of the crisis in
Ukraine, the Group’s performance has remained strong and its control
regime effective.
Responsibilities
The Board is required by the UK Corporate Governance Code 2018
(Code), which can be found on the Financial Reporting Council’s
website www.frc.org.uk, to establish formal and transparent
arrangements for considering how it should apply required financial
reporting standards and internal control principles and also for
maintaining appropriate relationships with the Company’s external
auditor, BDO LLP (BDO). The Committee’s terms of reference can
be viewed on the Company’s website www.playtech.com.
The Audit Committee’s key objectives are: the provision of effective
governance over the appropriateness of the Group’s financial reporting,
including the adequacy of related disclosures; the performance
of both the internal and external audit function and reporting, and
acting on their associated findings; and monitoring and challenging
the effectiveness of the Group’s systems of internal control, risk
management and related compliance activities.
The specific responsibilities delegated to, and discharged by,
the Committee include:
• Approving and amending Group accounting policies
• Reviewing, monitoring and ensuring the integrity of interim and annual
financial statements, and any formal announcements relating to
the Company’s financial performance, in particular the actions and
judgements of management in relation thereto before submission
to the Board
“ While challenges in 2022 tested
the strength and resilience of our
financial, risk management and
control processes, the Group’s
performance has remained
strong and its control regime
proved effective.”
John Krumins
Chairman of the
Audit Committee
106 Playtech plc Annual Report and Financial Statements 2022
Governance Report
• Providing advice (where requested by the Board) on whether the
Annual Report and Accounts, taken as a whole, is fair, balanced
and understandable, and provides the information necessary for
shareholders to assess the Company’s position and performance
business model and strategy
• Reviewing the Company’s arrangements for its employees to
raise concerns, anonymously or in confidence and without fear
of retaliation, about possible wrongdoing in financial reporting or
other matters arising under the Group’s whistleblowing policy
• Reviewing and approving the Internal Audit Charter and the
Audit Committee Terms of Reference on an annual basis
• Reviewing and monitoring the external auditor’s independence
and objectivity, including the effectiveness of the audit services
The Company Chairman, CEO, Chief Financial Officer, Group Head of
Internal Audit and the external auditor, BDO attended all meetings of
the Audit Committee by invitation, and the Vice President of Finance
was invited to attend the meetings of the Committee that considered
the audited accounts and the interim financial statements. In addition,
specific senior executives were invited to meet with the Committee to
address particular areas of focus during the year, including tax, legal
and structural considerations and compliance matters.
The members of the Committee meet the external auditor twice
without any Executive Directors being present in order to receive
feedback from them on matters such as the quality of interaction with
management. The Chairman also met with BDO on at least a monthly
basis to discuss matters either involving the audit process or of
general relevance to the Group.
• Monitoring and approving the scope and costs of audit
Meetings of the Committee
• Ensuring audit independence, implementing policy on the
engagement of the external auditor to supply non-audit services,
pre-approving any non-audit services to be provided by the auditor,
considering the impact this may have on independence, taking into
account the relevant regulations and ethical guidance in this regard,
and reporting to the Board on any improvement or action required
• Reporting to the Board on how it has discharged its responsibilities
In particular, the Code calls for the description of the work of the Audit
Committee to include its activities during the year, the significant issues
considered in relation to the financial statements and how they were
addressed, how the Committee assessed the effectiveness of the
external audit process, the approach of the Committee in relation to
the appointment or reappointment of the auditor and how objectivity
and independence are safeguarded relative to non-audit services.
Composition and Audit Committee meetings
The Audit Committee comprises three independent Non-executive
Directors. John Krumins is the Chair of the Committee and has over
two decades experience in corporate finance, technology and
complex project management, and has subsequently served both
as Chairman and Non-executive Director across a series of public
and private entities. The Board considers he has the recent and
relevant financial experience in order to Chair the Audit Committee.
In addition to John Krumins, the other members are Ian Penrose who
has considerable experience as both a CFO and Non-executive
Director across the gaming, leisure and technology sectors, and
Linda Marston-Weston who was formerly a senior tax partner at Ernst
& Young working with UK and global businesses across corporate
finance, strategy, tax, and leadership matters. The range and depth
of their financial and commercial experience enables them to deal
effectively with matters they are required to address and to challenge
management when necessary. The Committee is also authorised to
obtain independent advice if considered necessary.
During the year, the Chairman met with members of the management
team in order to understand more fully the context and evolving challenges
of Playtech’s business operations and thereby ensure the Committee’s
time was used most effectively and meeting agendas were set appropriately
to support the Board in fulfilling its corporate governance responsibilities.
These included matters relating to financial reporting, risk management
and internal control, internal audit process, the preparation and
compliance of the Company’s Annual Report and Accounts and the
external audit process.
The Committee met six times during 2022 and matters that were
broadly considered by the Committee during the year included:
• Review of current and anticipated requirements for the Group’s
financial control systems
• Maturity assessment of Group’s control environment, including
the review of third-party assessments and associated
enhancement projects
• Scope and effectiveness of the Group’s system of internal controls
and risk management
•
Updates on cybersecurity risks and system resilience
• Review of the structure and governance systems for investment
in associates
•
Review of disclosure requirements, with specific focus on
both Group revenue streams and related party considerations
across the Group
• Valuation of derivative financial assets held in LATAM operations
• Provisioning requirements and policies
• Data management and billing resilience
• Board delegated authorities
• Non-Financial information updates, including assessment of ongoing
management actions with respect to longer term COVID-19
implications and developments impacting Group Ukrainian operations
• Synergies with ESG and Risk Committees
And in the normal course of Committee business:
• Review and approve the Internal Audit Charter and the Internal
Audit Plan
• Review Committee Terms of Reference
• Results of internal audit reviews, management action plans to
resolve any issues arising and the tracking of their resolution
• Group refinancing, and Going Concern and Long-Term Viability
External Audit
The Audit Committee advises the Board on the appointment,
reappointment or removal of the Group’s external auditor. BDO was
appointed as the Group’s external auditor in 2005 and this is Oliver
Chinneck’s third year as lead audit partner. Its appointment was
formally reviewed in 2019 when a competitive tender process was run
in respect of the audit for the year ended 31 December 2020.
The Committee considered the approach, scope and requirements
of external audit as well as the efficacy and independence of BDO.
The Audit Committee met with BDO to discuss the external auditor’s
report to the Committee and review the letter of representation.
Playtech plc Annual Report and Financial Statements 2022
107
Governance Report Audit Committee report continued
Key estimates, judgements and financial
reporting standards
Revenue recognition
The Audit Committee reviewed the judgements made in respect of
revenue recognition, in particular in assessing whether it is acting
as a principal or an agent. In making these judgements, the Group
considers, by examining each contract with its business partners,
which party has the primary responsibility for providing the services
and is exposed to the majority of the risks and rewards associated
with providing the services, as well as if it has latitude in establishing
prices, either directly or indirectly. The business model of this division
is predominately a revenue share model which is based on royalties
earned from B2C business partners’ revenue. The Committee
concluded the Group’s revenue recognition policy relating to these
types of contracts are in line with IFRS requirements.
Furthermore, the Committee directed work this year to ensure that
the embedded controls within the IT systems capturing all the different
revenue streams are operating in line with our internal procedures and
accurately capture the data required for revenue recognition.
Goodwill and intangible assets
During the year, the Audit Committee also considered the
judgements made in relation to the valuation methodology adopted
by management to support the carrying value of goodwill and other
intangible assets, to determine whether there was a risk of material
misstatement in the carrying value of these assets and whether an
impairment should be recognised.
The Committee considered the assumptions, estimates and
judgements made by management to support the models that
underpin the valuation of goodwill and other intangible assets in the
balance sheet. Business plans and cash flow forecasts prepared by
management supporting the future performance expectations used in
the calculations were reviewed, as were the valuation methodologies
applied. The Committee noted that analyses and conclusions were
impacted by the conflict in the Ukraine and the fundamental move to
a higher interest rate environment.
The Committee particularly considered the outcome of the
impairment reviews performed by management. The impairment
reviews were also an area of focus for the external auditor, who
reported their findings to the Committee. The Committee satisfied
itself that the conclusions made on the impairments of the Bingo VF,
Quickspin, Eyecon and IGS cash-generating units were reasonable,
and, aside from that, there were no other material impairments to the
carrying value of goodwill or other intangible assets.
Classification and valuation of investment in associates
and derivative financial assets
The Audit Committee has considered the judgements made
in determining the classification of each structured agreement
arrangement, as further explained in Note 6 of the financial
statements, and in particular using the appropriate guidance under
the accounting standards to determine the existence of control or
significant influence.
In reviewing each assessment, the Committee is comfortable that
each classification, which is further explained and disclosed in Note
20 of the financial statements is correct and in accordance with the
accounting standards.
The Group engaged external valuation specialists to perform the
valuations of the derivative financial assets held at fair value, who
were guided by management in terms of judgements made. The Audit
Committee reviewed and challenged the resulting values of each
arrangement and is comfortable with the assumptions, estimates
and judgements in each of the valuations, including the valuation
methodology applied. The Audit Committee is also satisfied with
108 Playtech plc Annual Report and Financial Statements 2022
the judgement made in relation to the Caliente Call Option and the
impact this judgement may have on the valuation of the Playtech M&A
Call Option as further explained in Notes 20A and 20C.
Other financial statement areas
The Audit Committee reviewed the level of judgement and
estimation required in the following areas of the financial statements,
documented in management papers, and it is satisfied that the
judgement made and disclosures included in the financial statements
are reasonable and in line with each applicable IFRS:
• recovery of financial assets including trade receivables and
expected credit losses, particularly where aged debt is apparent.
Furthermore, the Committee was satisfied that the bad debt
provision in place for the Group’s receivables from Asia is sufficient
to cover its current exposure;
• the fair value assessment of assets acquired as part of the
investment made in LSport and associated equity call option during
the year, which was recognised as an investment in associate (refer
to Note 20);
• consideration of Group tax risk including potential uncertain tax
provisions. The Group has provided for uncertain tax positions
which meet the recognition threshold and these positions are
included within tax liabilities;
• adjusted performance measures and in particular the determination
of whether non-cash items, one-off items and not directly related
expenses to the operations of the Group should form part of the
adjusted results; and
• the recognition of the funds provided to Ocean 88 Holdings Ltd,
which is the sole holder of Galera Gaming Group (together “Galera”)
as a loan, a treatment which has remained unchanged from the prior
year (refer to Note 20A).
Viability and Going Concern Statements
The Committee reviewed management’s work on assessing risks
and potential risks to the Company’s business both for the going
concern and viability statement periods, which included challenging
the approach taken by management to support the going concern
statement on page 84 and viability statement set out on pages 91
and 92, by considering the Group’s principal and emerging risks. This
included the assumptions made on the repayment of the Group’s
borrowings when they fall due, as well as the payment for the renewal
of the Italian Gaming Licenses, and furthermore, considering the
potential impacts of the ongoing conflict in Ukraine, a potential
recessionary environment, and the impact these could have on the
business. Following this review, the Committee was satisfied that
management had conducted a strong and thorough assessment
and recommended to the Board that it could approve the viability and
going concern statements.
Financial Reporting Council (FRC) Review
Prior to the 2021 year end the Financial Reporting Council (FRC)
informed the Group that it had carried out a review of the Annual
Report for the year ended 31 December 2020 and raised questions as
to whether the Group had satisfied relevant reporting requirements.
The Group worked with the FRC to clear their queries, and a number
of key disclosure matters were enhanced within the 2021 financial
statements in respect of the following areas:
•
Investments in derivative financial assets
• Sun Bingo contract
•
Revenue recognition
• Taxation
Governance Report The review was completed in October 2022 and certain additional
disclosure improvements are included within these financial
statements having already made a number of changes within
the 2021 financial statements.
Further, the Committee notes a review is currently in progress by the
FRC’s Audit Quality Review team into our 2021 audit by BDO, which
included a meeting between the Chairman and the FRC’s team. BDO
have kept the Committee updated with progress of the review and
have considered findings to date as part of the audit approach for the
2022 year-end audit. The Committee is expected to consider the final
findings with BDO and understand how BDO intend to address them
in future audits.
External audit efficiencies, independence and
non-audit services
Following the 2021 audit the Chairman met separately with the current
and previous Chief Financial Officer and the lead external auditor to
review the audit process, and to highlight areas of improvement for the
2022 audit. The findings were then reviewed with the Audit Committee
members and a programme to improve the efficiency of the audit
process was agreed for 2022. This programme covered a formal
review of corporate measures to support the audit process, including
a restructuring of certain finance team responsibilities and a project to
improve the Group’s financial control regime. The audit process, which
while previously sufficient for audit purposes, is now more efficient and
receives greater oversight by the Audit Committee.
In addition, the Audit Committee, on behalf of the Board, undertakes
a formal assessment of the auditor’s independence each year,
which includes:
• a discussion with the auditor of a written report detailing all
relationships with the Group and any other parties which could
affect independence or the perception of independence;
• a review of the auditor’s own procedures for ensuring independence
of the audit firm and partners and staff involved in the audit,
including the periodic rotation of the audit partner;
• obtaining written confirmation from the auditor that they are
independent; and
• a review of fees paid to the auditor in respect of audit and
non-audit services.
The FRC’s Revised Ethical Standard introduced certain specific
criteria for non-audit work. This included the introduction of a
non-audit services fee cap and white list of permitted services.
A breakdown of audit and non-audit fees are included in Note 11
to the financial statements on page 177.
The Committee remain satisfied with the manner, robustness and level
challenge of BDO’s audit processes and believe BDO should remain
as auditor for 2023. The reappointment will be formally considered
at the Annual General Meeting.
Internal Audit and Risk Management
The Company has an internal audit function which comprises six
in-house auditors, including the Director of Internal Audit & Risk,
which reports to the Chair of the Committee and has direct access
to all key executives. Its key objectives are to provide the Board, the
Committee and management independent and objective assurance
on risks and mitigating controls, and to assist the Board in meeting
its corporate governance and regulatory responsibilities. Overall,
the system of internal controls and audit is designed to ensure local
legal and regulatory compliance and manage, rather than eliminate,
the risk of failure to achieve business objectives. It can therefore only
provide reasonable and not absolute assurance against material
misstatement or loss.
As also reported in last year’s Annual Report, in recognition of the
increasing level of complexity across the Company the Committee
continues to take further steps to expand and enhance internal
controls, strengthening the internal audit function and its position
within the organisation. In addition, in recognition of the increasingly
complex environments within which the Group operates, a separate
Risk Management committee continues to ensure appropriate review
and assessment of risks and risk appetite within the Company, thereby
offering further oversight and challenge of the control regimes.
In order to provide access to evolving specialist knowledge
required to audit certain aspects of the Company, particularly with
respect to IT, the historical Internal Audit relationship between
PricewaterhouseCoopers LLP (PwC) and Playtech continues as a
co-sourced arrangement, with PwC providing support to the Internal
Audit Team given their experience with the Group across a series of
projects. The Committee believes this is an appropriate and effective
model, and an important source of insight in their assessment of the
evolving Group.
The scope of work of the Internal Audit team covers all the systems
and activities of the Group. Early in 2022 the scope was reviewed
and reprioritised in light of the Group’s changing risk profile and
restrictions placed on how and where it could engage with the Group
given ongoing COVID-19 restrictions in some areas of the Group’s
operations. During the year, the Internal Audit Team performed a
number of audits over both individual entities and central functions
across the Group, which included:
• Data Protection Audit
• Financial Governance & Systems Health Check
• Corporate Criminal Offence (CCO) Impact Assessment
•
IMS Security Audit/Billing Audit
• Fraud Maturity Review/Risk Management Maturity Health Check
•
Playtech Sports Cybersecurity Audit
The results of these audits were reported to the Audit Committee on
a regular basis, with recommendations made by Internal Audit and
corresponding management actions being reviewed and challenged,
where appropriate. In addition to regular feedback of audit results, the
Internal Audit Team monitors completion of management actions and
provides updates of these to the Audit Committee twice a year or upon
request by the Committee on a quarterly basis.
A particular focus of the Audit Committee in 2022 was a complete
review and re-setting of the Group’s internal financial control regime
in light of expected SOX Compliance Requirements. The Audit
Committee worked in conjunction with the finance team, as well as
the Internal Audit Team and PwC, to assess requirements and scope
a project plan. An external consultant was appointed to lead the
review, working across all aspects of the Group, and develop revised
policies which will be implemented during 2023 and 2024 as part
of an expanded second line controls function.
The Committee confirms that any necessary action will be taken to
remedy any significant failings or weaknesses identified from any
Internal Audit reviews.
Each year, the Committee reviews the quality and effectiveness of the
Internal Audit Team through a number of methods, including a regular
review of ongoing work to ensure the Audit plan is being delivered,
discussions with key executives, and feedback from both BDO and
PwC. This review includes an assessment of Audit Plan delivery,
business understanding, impact of the Internal Audit Team on the
organisation, communication and performance. In addition, the Audit
Committee Chairman meets with the Director of Internal Audit & Risk
and his deputy at a minimum on a monthly basis to be updated on the
Team’s activities.
Playtech plc Annual Report and Financial Statements 2022
109
Governance Report Audit Committee report continued
Internal Audit and Risk Management continued
Areas which will have their control regime reviewed in 2023 are:
• R&D and technology expenditure to ensure ongoing efficacy of
budgeting and execution occurs in light of the Group’s changing
business model and geographic emphasis
• Mergers & Acquisitions to ensure that appropriate project
evaluation and prioritisation takes place, and requisite integration
and management oversight occurs
• ESG and CSR management to ensure the Group delivers on all
environmental, regulatory and other stakeholder undertakings
Looking ahead the Committee is working on the assumption that
Playtech will be subject to further regulatory and compliance
requirements as it continues to expand geographically and the
complexity of its business model increases, while at the same
time regulators increase the levels of scrutiny across the sector.
Accordingly, the Committee has taken steps to both broaden and
deepen the control environment across the Group with particular
focus this year on enhanced financial controls, but also establishing
oversight of ESG, CSR, and broader security and audit regimes.
My thanks go to Andrew Smith for his service to the Board and as
CFO working with the Audit Committee, having stepped down in
November 2022.
I believe the skills and experience of the Committee members remain
strong and relevant, enabling the Audit Committee to continue to
perform effectively.
John Krumins
Chairman of the Audit Committee
23 March 2023
An Internal Audit Plan for 2023 was developed by the Internal Audit
Team, and challenged and approved by the Audit Committee at the
November 2022 Audit Committee meeting. Internal Audit will carry
out audits in accordance with this plan using a risk-based approach
and continue to maintain effective lines of communication with the
Audit Committee and key management. The Committee believes this
programme of continual assessment will ensure the Internal Audit
Plan for 2023 remains fit for purpose in light of any new or emerging
risks. The Internal Audit Team will also be utilised to provide assurance
over corporate governance matters and for ad hoc projects,
where necessary.
Committee Evaluation
The performance of the Audit Committee was assessed as part
of the Board Review which was facilitated by Independent Audit
Limited. The process sought views from Executives and Non-
executive Directors and included a review of the operations of the
Committee. Independent Audit Limited’s conclusion was that the
Audit Committee has been transformed under the current Chair
and demonstrably holds the finance leadership accountable for
performance and delivery. In addition, Independent Audit highlighted
that a new Standard covering the management of external oversight
is being developed as an enforceable requirement. During 2023, the
Committee will start developing its approach to this area of evaluation,
including obtaining the views of stakeholders from across the business.
Non-Financial Control Systems
In parallel to the review of the Group’s internal financial control regime,
the Audit Committee considered the Group’s broader control regime
and how best to assess overall governance given the evolving nature
of the Group’s strategic priorities, the regulatory environments in
which the Group operates and stakeholder interests.
In order to monitor and challenge key dimensions of the Group’s
governance model the Audit Committee formalised a review process
with each of the senior management responsible for compliance,
sustainability, tax and IT security. As part of the 2023 Audit Committee
programme, each team will present its strategy, together with
current and any proposed changes to their control regimes, and
this will provide the basis for subsequent formal evaluation over
the following 12 months.
110 Playtech plc Annual Report and Financial Statements 2022
Governance Report Statement by the Committee Chairman
Restructured
remuneration aligns
with performance
“ The balance of remuneration
has shifted towards one driven
by performance, which the
Remuneration Committee believes
has contributed to the significant
growth in Group performance
over the period.”
Ian Penrose
Chairman of the
Remuneration Committee
Dear Shareholder
On behalf of the Board, I welcome the opportunity to present the
Remuneration Committee’s report on Directors’ remuneration for
the year to 31 December 2022.
This report describes how the Board has applied the principles of
the 2018 UK Corporate Governance Code (the “Code”) to Directors’
remuneration. Although Playtech is an Isle of Man incorporated entity
and, as such, is not required to comply with the UK regulations on
Directors’ remuneration, we recognise the importance of shareholder
transparency. Accordingly, we can confirm that the Company adheres
to the UK regulations as they relate to Directors’ remuneration and the
report below is divided into: (i) this Annual Statement; (ii) a summary
of the Directors’ Remuneration Policy (the “Policy”) as approved
by shareholders at the 2021 AGM; and (iii) the Annual Report on
Remuneration that reports on the implementation of the Company’s
stated Remuneration Policy for the year to 31 December 2022. The
Annual Report on Remuneration and this Statement will be the subject
of an advisory shareholder resolution at the forthcoming AGM.
Business context
As shareholders will be aware, we made significant and wide-ranging
changes to the Remuneration Policy in 2021 as a result of an extensive
review and shareholder consultation process. In undertaking this
review the Committee sought to draw a line under the poor voting
record on remuneration over the past few years. Changes included
a 20% reduction in the base pay of the CEO, reduction in executive
pension contributions, increase in the bonus deferral into shares and
a material reduction in the fee for the Chairman. At the 2022 AGM
the total votes received in favour of resolution for the Remuneration
Report were 69.67%. Following the AGM and throughout the year
during the takeover period and discussions, the Group has continued
to engage extensively with shareholders. It was clear from these
discussions that the principal reason why certain shareholders were
unable to support the resolution related to the CEO’s payout under the
one-off equity incentive scheme approved by shareholders in 2019.
Shareholders were, however, supportive of the changes implemented
since 2021.
As a result of these significant changes, the balance of remuneration
shifted towards one driven by performance, which the Remuneration
Committee believes has contributed to the significant growth in Group
performance over the period.
Playtech plc Annual Report and Financial Statements 2022
111
Remuneration Report
Statement by the Committee Chairman continued
Business context continued
Playtech has continued to operate strongly despite the significant
distractions that were presented in 2022 by:
• The takeover offer from Aristocrat, that was at a 62% premium to
the share price at the time of offer, being rejected by shareholders
at EGM in February 2022
• The takeover offer for the Financials business, Finalto, having
been rejected by shareholders at the GM in August 2021, finally
being sold to a new bidder in July 2022 having been approved by
shareholders at GM
• Ongoing takeover activity from two other bidders which were finally
terminated in the summer of 2022
• Extensive discussions on realising value in the US
• The associated demands on the Board to deal with the above,
together with the time commitments to materially improve the levels
of overall governance and impact of the Company’s Committees
• The humanitarian and business impact of the war in Ukraine where
over 10% (714 employees) of the Company’s workforce are based
Despite the above, the Remuneration Committee and Board is
pleased that the performance of the business has been very strong,
with adjusted EBITDA of €405.6 million (28% increase on 2021), which
is reflected in the remuneration outcomes for the year.
Implementation of Policy in 2022
The significant changes which formed the basis of the new Policy
were implemented for the first time in 2021, and we operated
remuneration in line with the Policy for 2022.
As stated in the Annual Report last year, no LTIP award was granted in
2021, due to the Company being in a closed period for the majority of
2021 and into 2022 as a result of the proposed acquisition of Playtech
by Aristocrat, subsequent takeover discussions/negotiations and
then the subsequent strategic options being evaluated. The Company
was only able to grant LTIP awards in August 2022, once the Group
came out of an unusually lengthy closed period of over 12 months,
which meant there was a gap of nearly two years between grants.
The 2022 LTIP awards are subject to relative TSR and adjusted EPS
performance. Further details on the 2022 LTIP awards are given
on page 122.
We confirm that as stated last year, the Committee did not grant
any form of catch-up LTIP award despite the Executive Directors
effectively missing their 2021 award. This resulted in a significant
reduction in the remuneration potential of the Executive Directors, and
indeed the wider Playtech management team, and we are delighted at
their continued focus on the business and delivery despite this.
The Committee remains cognisant of the need to continue to show
restraint with regards to executive remuneration, particularly in the
context of the current cost of living crisis (which has a more significant
impact on our employees). In this vein, the Committee reviewed
the salaries of the Executive Directors and senior management
team and approved increases of 2% and 3.5% for the CEO and
CFO (significantly below the 7% average increase awarded across
the UK workforce) with effect from 1 January 2022. Furthermore, it
remains the Committee’s intention that future salary increases for the
Executive Directors will not exceed the general level of increases for
the Group’s employees.
As a result of the intensive corporate activity that occurred during the
year, the Non-executive Directors undertook significant additional
responsibilities, and committed substantially more time to the business,
which extended far beyond their normal responsibilities. This was
a complex, lengthy and intense period of corporate activity, which
meant the Company was in a closed period for over 12 months.
112 Playtech plc Annual Report and Financial Statements 2022
Furthermore, the expansion into the United States necessitated extensive
licence applications in several States, one requiring physical attendance.
It is estimated that each of the Chairman and Non-executive Directors
spent at least an additional 32 days (2021: 20 days) over and above
their contracted hours working on Playtech matters over the course
of 2022. As a result, and in line with Policy, a pro rata additional
fee was paid to the Chairman and each Non-executive Director,
commensurate with the time spent and the fee level for the Senior
Independent Director, equating to £132,000 (2021: £120,000 or
lower if appointed part way through 2021), and then scaling back the
additional fees payable so the increase was no more than 10% of
the additional fees paid in 2021, despite the more than 50% increase
in additional days.
It is not anticipated that any additional fees will be paid in respect of
2023, however if this does occur the fees and basis for determining
these will be disclosed in the 2023 Directors’ Remuneration Report.
Executive Director changes during the year
As announced on 1 November 2022, the Company mutually agreed
with Andrew Smith that he would step down from the Board and his
role as CFO on 28 November 2022. Chris McGinnis was promoted
to CFO and Executive Director of the Company with effect from the
same date. Given the proximity to the financial year end, the Board
agreed with Andrew Smith that he would remain involved with the
business until the end of the financial year to facilitate an orderly
transition to the new CFO.
Further details regarding the leaving arrangements for Andrew Smith
are set out on pages 122 and 123.
The reward package for Chris McGinnis has been set in line with the
existing remuneration policy. Chris McGinnis was appointed as CFO
on a basic salary of £350,000 (which is lower than Andrew Smith,
whose salary on his stepping down from the Board was £445,567).
The Committee intends to increase his salary to £400,000 effective
from 1 July 2023 once he becomes established in his new role,
with a commitment to not undertake a further salary review until
1 January 2025.
Performance and pay outcome for 2022
Annual bonus
The financial performance of Playtech was strong in 2022, despite
the enormous distractions and challenges faced due to the lengthy
takeover activity and corporate transactions.
At the beginning of the year, the Committee reviewed the approach to
calibrating challenging performance targets, and agreed to increase
the level of stretch within the targets such that the level of performance
required to achieve maximum payouts under the financial targets was
to exceed target by 10%. This was an increase on the level of stretch
within the 2021 targets, which required a 5% outperformance of target
to achieve maximum payout.
Cognisant of consensus forecasts for adjusted EBITDA (€331 million
at the beginning of the financial year), the Committee set on-target
adjusted EBITDA (equivalent to a 50% payout under the adjusted
EBITDA element) 10% above consensus at €365 million. The
maximum target adjusted EBITDA was set at a further 10% premium
to this at €401.5 million, or 21% above consensus. Similarly, with
consensus forecasts for cash generation being €284 million, the
target cash generation was set at €307 million, and maximum payout
at €338 million. Adjusted EBITDA and cash generation for 2022
were €405.6 million and €396.9 million respectively, which resulted
in a maximum payout under both the adjusted EBITDA and cash
generation elements of the bonus.
The Group made good progress against all of the key strategic and
operational objectives (comprising 20% of the annual bonus) set
at the beginning of the year. The CEO was tasked with completing
Remuneration Report the disposal of the Finalto business, accelerating the performance
and market positioning of the LATAM business, continuing to drive
the digital growth/channel shift in Snaitech to improve the quality of
earnings and therefore value, and accelerating Playtech’s position
in the rapidly growing market in the United States. The former CFO
was tasked with improving the structure and efficiency of the balance
sheet, supporting the CEO on certain strategic initiatives, and to
commence the overview of the business integration and efficiency
plan to drive material cost efficiencies and additional cash generation
in 2023 and particularly 2024.
In addition, for both the CEO and former CFO, the remaining 10% of
the annual bonus was allocated towards ESG targets. This was a new
criteria introduced in 2022, and is being extended to all members of
the senior management team in 2023 in recognition of its strategic
importance. The specific ESG measures assessed in 2022 were:
• Safer gambling – innovation in and promotion of safer gambling
solutions and insights, including continued uptake and development
of Playtech Protect solutions
• Environment – continued progress towards our stated emissions
reduction target of 40% scope 1 and 2 emissions target by 2025
(on a 2018 baseline) and increased use of renewable energy
across the Group
• DEI targets – annual progress towards increasing female representation
across the leadership and senior management population to 35%
from a 2021 baseline
• Reputation, ethics and Compliance – no new material ESG, ethical
or compliance breaches resulting in significant reputational damage
for the Group
• Leadership qualities around crisis management, human compassion,
operational excellence and standard setting during the Ukraine war
where we have 10% of the global workforce
In particular, the Committee took account of the CEO’s exceptional
leadership and social responsibility in facing the ongoing Ukraine crisis.
Playtech has over 700 employees (10%+ of the global workforce)
in Ukraine, and, before and during the invasion, Playtech’s Crisis
Management Group has worked 24/7 to look after our workforce,
provide relocation opportunities to adjacent countries and provide
humanitarian support whilst ensuring the business continues to
operate. The Committee is proud of Playtech’s response to this awful
situation. Finally, it should be noted that the above has been achieved
against the backdrop of continued corporate activity and takeover
approaches which have understandably consumed large amounts of
management time, whilst continuing to deliver record financial results.
In this context and recognising the significant progress made in
respect of the key strategic, operational and ESG objectives of the
Company, the Committee determined to pay a maximum bonus in
respect of these objectives. When combined with the maximum
payout achieved under the financial targets, the overall bonus payout
for the CEO and former CFO was 100% of maximum.
This amounted to £1.6 million (2021: £1.6m) for the CEO and £613k
(2021: £549k) for the former CFO. As set out above, the Remuneration
Committee determined to not pro-rate the bonus for the former CFO
in recognition that he was actively employed during the whole financial
year, in reflection of the Board’s request for him to remain in the
business to support an orderly transition.
No bonus was payable to the new CFO under this plan in respect
of the one month of the year served as a Director.
In line with the remuneration policy, 33.3% of the annual bonus
payment to the CEO will be deferred into shares. In light of the
exceptional Company performance and Andrew Smith’s commitment
to the Company until the year end, the Committee determined that the
annual bonus would be paid in cash for the former CFO.
LTIPs
The LTIP granted in 2020 which will vest in October 2023 is subject
to Adjusted Diluted EPS (25%) and relative TSR (75%) performance.
Adjusted Diluted EPS for the financial year ending 31 December 2022
was 51.5 Euro cents, which will result in vesting of 93.4% of the EPS
element. As at 31 December 2022, the performance period for the
relative TSR component of the LTIP is not yet complete (26 October
2020 – 25 October 2023), and therefore an estimate of the vesting
under this element of 50% of maximum has been provided at year end.
Following the end of the performance period, the final vesting level
will be calculated and the corresponding LTIP amounts disclosed in
the single figure table for financial year ending 31 December 2022 will
be updated in the 2023 Directors’ Remuneration Report to reflect the
final outcome.
These awards are also subject to a two-year post vesting holding
period, in line with the Policy.
The Committee recognises that the CEO also has a one-off equity
incentive scheme that was approved by shareholders in 2019. This
partially lapsed during 2022 as a consequence of the share price not
reaching the £8 share price targets set in 2019. Full details are set out
in the Annual Report on Remuneration.
How we will operate the Policy in 2023
Base salary
The average salary increase for 2023 awarded to those employees
across the UK workforce who were eligible to receive a salary increase
was 8.1% as a consequence of the rising demand for suitably qualified
technology staff, together with the increased rate of inflation. The
Committee is very conscious that the effects of inflationary pressures
affect the lower paid employees the most, and so decided that all
Board members and senior staff (and therefore higher earners) would
be limited to an increase of 3.5%. As a consequence, the salary for the
CEO increased by 3.5% to £844,000 with effect from 1 January 2023.
As set out above, the new CFO commenced his role on a basic salary
of £350,000 (significantly lower than the previous CFO, whose base
salary on exit was £445,567), which will increase to £400,000 on 1 July
2023, and then not change until the next review on 1 January 2025.
The Committee has commissioned a market benchmarking exercise
for all of the roles within its remit, including those in the wider senior
management team, and will reflect on the results of this as well as pay
and conditions across the wider workforce when considering any
further amendments to salary levels next year.
Annual bonus
The annual bonus opportunity for 2023 will remain unchanged at
200% and 150% of salary for the CEO and CFO respectively. Financial
performance will continue to drive 70% of the bonus and will be split
50% EBITDA and 20% cash flow. We have set stretching targets for
both measures in an inflationary year facing a cost of living crisis,
material rises in energy costs and the ongoing war in Ukraine (where
we employ over 700 people), with target performance set above
market consensus on 25 January 2023 (the date of the meeting of
the Remuneration Committee when the targets were set) and with
maximum for achieving a material increase above consensus. The
remaining 30% of the bonus will be based on key strategic targets
which will again include ESG measures relating to safer gambling,
diversity and reduction of the Company’s Scope 1, Scope 2 and
supply chain emissions. The targets will have a graduated approach
to differentiating between good and excellent performance, with full
disclosure in next year’s Annual Report.
In line with the Directors’ Remuneration Policy, 33.3% of any annual
bonus payment will be deferred into shares for two years.
Playtech plc Annual Report and Financial Statements 2022
113
Remuneration Report Statement by the Committee Chairman continued
LTIP award
Following expiry of the previous scheme, shareholders approved
a new ten-year LTIP scheme at the 2022 Annual General Meeting.
It is the intention of the Company to grant LTIP awards to the Executive
Directors, senior management and staff in respect of 2023 as soon as
practicable following the publication of the 2022 Annual Results.
Pension
Following an initial reduction from 20% to 15% effective 1 July 2021,
the pension contributions to Executive Directors reduced from 15%
to 12.5% of salary effective from 1 July 2022 and to 10% effective
from 1 October 2022. They are now aligned with the wider workforce
contribution of 7.5% from 1 January 2023.
Concluding remarks
The Committee continues to work hard to improve corporate
governance and strengthen the pay for performance culture in
the business, whilst materially reducing the fixed pay and pension
contributions for the executives. We believe that this is having
a significant positive impact on the financial performance of
the business, and on delivering initiatives to materially improve
shareholder returns.
The Committee and I hope that you find the information in this report
helpful and informative, and we welcome any comments or questions
ahead of the 2023 AGM.
Ian Penrose
Chairman of the Remuneration Committee
23 March 2023
114 Playtech plc Annual Report and Financial Statements 2022
Remuneration Report Summary of Directors’ Remuneration Policy
Approved at 2021 AGM
Remuneration Policy for Executive Directors
The following table summarises each element of remuneration, how it supports the Company’s short and long-term strategic objectives
and changes the Committee is proposing to the current Policy based on shareholder feedback.
Framework to
assess performance
n/a
Element of
remuneration
Short-term and long-term
strategic objectives
Operation
Base salary
To attract, retain and
motivate high calibre
individuals for the role
and duties required
To provide a market
competitive salary
relative to the
external market
To reflect appropriate
skills, development and
experience over time
Normally reviewed annually by the
Remuneration Committee, with any
increases typically effective in January
Takes account of the external market
and other relevant factors including
internal relativities and individual
performance. In reviewing salary levels,
the Remuneration Committee may
also take into account the effect of any
exceptional exchange rate fluctuations
in the previous year
Executive Directors decide the
currency of payment once every three
years (which can be in Pound Sterling,
US Dollars or Euros) with the exchange
rate being fixed at that time
Opportunity
Other than when an
executive changes roles
or responsibilities, or when
there are changes to the
size and complexity of the
business, annual increases
will not exceed the general
level of increases for the
Group’s employees, taking
into account the country
where the executive
ordinarily works
If a significant adjustment is
required, this may be spread
over a period of time
Playtech plc Annual Report and Financial Statements 2022
115
The Directors’ Remuneration Policy was approved by shareholders at the AGM on 26 May 2021 (75.47% of votes cast being in favour) and became effective from that date. There are no proposals to amend the Directors’ Remuneration Policy at the 2023 AGM. A summary of the policy is set out below for reference to assist with the understanding of the contents of this report. The full policy is detailed in our 2020 Annual Report, which can be found in the “Investors” section under “Annual Reports” on the Company’s corporate website (www.playtech.com). Remuneration philosophyOur Remuneration Policy is designed to reward the contributions of senior management as well as incentivise it to drive shareholder returns, and to maintain and enhance Playtech’s position as the software and services provider of choice to the gambling sector.Remuneration is delivered via fixed remuneration and simple and transparent incentive-based plans enabling the Executive Directors to be rewarded for delivering strong financial performance and sustainable returns to shareholders. In a fast-moving sector such as ours we need to apply the Policy flexibly in order to deliver the right level of overall pay to Directors.Considerations when forming the Remuneration Policy This Policy has been formed in accordance with the principles and provisions in the Code. The table below sets out how the Committee has addressed various aspects in the Code:• Clarity – The Committee’s policy has been clearly set out in this report, the individual elements of remuneration and their operation• Simplicity – This proposed Policy is well understood by both management and shareholders and aligns to typical market practice• Risk – The Committee believes that the incentive structure does not encourage undue risk taking. There are a number of mechanisms available to the Committee, including discretions and malus and clawback provisions within incentive plans, that allow adjustment in the case that the Committee believes the outcomes are excessive • Predictability – The Policy table and the illustrations of remuneration provide an illustration of potential levels of remuneration that may result from the application of the Policy under different performance scenarios. The Committee believes that the range of remuneration scenarios is appropriate for the roles and responsibilities of the Executive Directors, based on the performance required for incentive awards to pay out• Proportionality – The Policy has been designed to give appropriate flexibility in operation, particularly in relation to incentive plan metrics, which allows the Committee to implement the Policy from year to year using the metrics that align with the Group’s strategy. Furthermore, the Policy contains discretion to allow the Committee to adjust remuneration outcomes to ensure that they are reflective of overall performance in the short and long term • Alignment to culture – As well as aligning with the strategy of the business, the Policy has been formed to allow focus on broader stakeholders. In particular, there is an increased focus on employee and shareholder engagement through incentive metrics and Committee discretionRemuneration Report Summary of Directors’ Remuneration Policy continued
Approved at 2021 AGM
Remuneration Policy for Executive Directors continued
Element of
remuneration
Short-term and long-term
strategic objectives
Operation
Benefits may include private medical
insurance, permanent health
insurance, life insurance, rental
and accommodation expenses on
relocation and other benefits such
as long service awards
Other additional benefits may be
offered that the Remuneration
Committee considers appropriate
based on the Executive Director’s
circumstances
Non-pensionable
Paid in cash and shares
Clawback and malus provisions apply
whereby bonus payments may be
required to be repaid for financial
misstatement, misconduct, error,
serious reputational damage and
corporate failure
Benefits
To help attract and retain
high calibre individuals
Annual bonus
Clear and direct
incentive linked to annual
performance targets
Incentivise annual
delivery of financial
measures and personal
performance
Corporate measures
selected consistent
with and complement
the budget and
strategic plan
Opportunity
n/a
Framework to
assess performance
n/a
200% of salary for the CEO
and 150% of salary for other
Executive Directors
Performance
measured
over one year
33.3% of any payment
is normally deferred into
shares for two years which
are subject to recovery
provisions
Long Term
Incentive Plan
(LTIP)
Aligned to key strategic
objective of delivering
strong returns to
shareholders and
earnings performance
Grant of performance shares, restricted
shares or options
Two-year holding period will be applied
to vested shares (from 2019 awards),
subject to any sales required to satisfy
tax obligations on vesting
Maximum opportunity of
250% of salary with normal
grants of 200% and 150%
of salary in performance
shares for the CEO and
other Executive Directors
respectively
Clawback and malus provisions apply
whereby awards may be required to
be repaid for instances of financial
misstatement, misconduct, error,
serious reputational damage and
corporate failure
116 Playtech plc Annual Report and Financial Statements 2022
Based on a
mixture of financial
performance
and performance
against strategic
objectives
Normally, at least
70% of the bonus
will be dependent
on financial
performance
Bonus is paid on
a sliding scale of
0% for threshold
increasing to 100%
for maximum
performance
Performance
measured over
three years
Performance
targets aligned with
the Group’s strategy
of delivering
strong returns
to shareholders
and earnings
performance
25% of the awards
vest for threshold
performance
Remuneration Report Element of
remuneration
Short-term and long-term
strategic objectives
Operation
Opportunity
Framework to
assess performance
Pension
Provide
retirement benefits
Provision of cash allowance
Pension contributions for
existing Executive Directors
will be as follows:
n/a
Share
ownership
guidelines
The Company has a
policy of encouraging
Directors to build
a shareholding in
the Company
Non-executive
Directors
To provide a competitive
fee for the performance
of NED duties, sufficient
to attract high calibre
individuals to the role
Executive Directors are expected
to accumulate a shareholding in the
Company’s shares to the value of at
least 200% of their base salary
Executive Directors are required to
retain at least 50% of the net of tax out-
turn from the vesting of awards under
the deferred bonus plan and LTIP until
the minimum shareholding guideline
has been achieved
Shares must be held for two years after
cessation of employment (at lower of
the 200% of salary guideline level, or
the actual shareholding on departure)
Fees are set in conjunction with the
duties undertaken
Additional fees may be paid on a
pro-rata basis if there is a material
increase in time commitment and
the Board wishes to recognise this
additional workload
Any reasonable business-related
expenses (including tax thereon) which
are determined to be a taxable benefit
can be reimbursed
• 20% until 30 June 2021
• 15% effective from
1 July 2021
• 12.5% effective from
1 July 2022
• 10% effective from
1 October 2022
• From 1 January 2023,
alignment with the
wider workforce
Pension for new Executive
Directors will be in line with
the pension plan operated for
the majority of the workforce
in the jurisdiction where the
Director is based
n/a
n/a
n/a
Other than when an individual
changes roles or where
benchmarking indicates fees
require realignment, annual
increases will not exceed the
general level of increases for
the Group’s employees
Playtech plc Annual Report and Financial Statements 2022
117
Remuneration Report Summary of Directors’ Remuneration Policy continued
Approved at 2021 AGM
The Committee’s policy is that annual salary increases for Executive
Directors will not generally exceed the average annual salary increase
for the wider employee population determined with reference to the
country in which the Executive ordinarily works, unless there is a
particular reason for any increase, such as a change in the Executive’s
roles and responsibilities or a change in the size and complexity of
the business.
The Committee also considers external market benchmarking to
inform the Executive’s remuneration. External market benchmarking
is also considered in relation to remuneration decisions of the
wider workforce.
Consideration of shareholders’ views
The Company is committed to engagement with shareholders and
has engaged extensively on remuneration and other issues since
the 2022 AGM, particularly as a consequence of the corporate
activity. Shareholders provided valuable input into the Company’s
Remuneration Policy.
Consideration of employment conditions elsewhere
in the Company when setting Directors’ pay
The Remuneration Committee, when setting the Policy for Executive
Directors, takes into consideration the pay and employment
conditions through the Company as a whole.
In determining salary increases for Executive Directors, the
Committee considers the general level of salary increase across
the Company. Typically, salary increases will be aligned with those
received elsewhere in the Company unless the Remuneration
Committee considers that specific circumstances exist (as mentioned
in the Policy table) which require a different level of salary increase for
Executive Directors.
As part of the Committee’s wider remit under the Code, the
Committee will continue to monitor pay policies and practices within
the wider Group and to provide input and challenge in respect of
current policies and practices as well as any proposed future review
and changes to ensure that they are appropriate, fair and aligned to
the Company’s remuneration principles and support the culture and
growth of the business.
With respect to employee engagement, the Chairman of the
Remuneration Committee (and the wider Board) engages with the
CEO of Snaitech, the COO of our B2B activities together with the
Global Head of Human Resources on strategic and operational issues
affecting and of interest to the workforce, including remuneration,
talent pipeline and diversity and inclusion.
118 Playtech plc Annual Report and Financial Statements 2022
Remuneration Report Annual report on remuneration
The sections of this report subject to audit have been highlighted. The figures are shown both in Pounds and Euros, for ease of reference.
Directors’ emoluments (in £) (audited)
Mor Weizer
Andrew Smith (former CFO)
Chris McGinnis
Executive Director
2022
2021
2022
2021
2022
2021
Salary1
Bonus2
Annual long-term incentive3,4
One-off long-term incentive5
Benefits6
Pension
Total emoluments
Total fixed pay
Total variable pay
816,000
1,632,000
1,690,979
—
38,271
107,100
4,284,351
961,371
3,322,979
800,000
1,600,000
1,440,661
5,114,000
34,633
156,667
9,145,961
991,300
8,154,661
408,437
612,655
208,857
—
31,898
56,624
430,500
548,888
452,710
—
33,637
82,604
1,318,471
1,548,339
496,959
546,741
821,512
1,001,598
33,205
—
253,645
—
260
2,490
289,600
35,956
253,645
—
—
—
—
—
—
—
—
—
Directors’ emoluments (restated in €) (audited)
Mor Weizer
Andrew Smith (former CFO)
Chris McGinnis
Executive Director
2022
2021
2022
2021
2022
2021
Salary1
Bonus2
Annual long-term incentive3,4
One-off long-term incentive5
Benefits6
Pension
Total emoluments
Total fixed pay
Total variable pay
957,443
1,914,886
1,906,920
—
44,798
125,895
932,921
1,906,208
1,727,051
6,013,000
40,367
182,230
478,802
713,094
243,097
—
37,469
66,434
501,936
653,934
542,704
—
39,987
96,091
4,949,943
10,801,777
1,538,896
1,834,650
1,128,137
1,155,518
3,821,806
9,646,259
582,705
956,191
638,014
1,196,638
37,703
—
286,036
—
294
2,816
326,849
40,814
286,036
—
—
—
—
—
—
—
—
—
1
2
3
4
Basic salary of the Executive Directors is determined in Pounds Sterling and then converted into Euros at the average exchange rate applicable during the relevant financial year for the purpose
of this report. The Committee reviewed the Executive Directors’ salaries with effect from 1 January 2022. It was decided that Mor Weizer and Andrew Smith’s salary would be increased by 2% and 3.5%
respectively. Chris McGinnis was appointed to the Board on 28 November 2022 on a base salary of £350,000 and therefore the amounts disclosed are in respect of the period he served as a Director.
The figures for bonuses represent payments as determined by the Remuneration Committee for the Executive Directors based on the Company’s performance during each financial year and
by reference to their actual salary earned during the respective period. The bonuses were determined in Pounds Sterling and then converted into Euros at the exchange rates applicable as at
31 December 2021 and 31 December 2022 respectively. Details of (a) how the annual performance bonus for the Executive Directors was determined; and (b) the timing of bonus payments are
set out below. Chris McGinnis was appointed to the Board on 28 November 2022 but did not receive a bonus in respect of the period he served as a Director.
The LTIP awards granted in February 2019 vested subject to performance conditions measured over a three-year period from 1 January 2019 to 31 December 2021. As a result of the performance
conditions being partially met, 46.16% of the award will vest. This performance outcome corresponds to a total of 217,787 and 68,437 nil cost options for Mor Weizer and Andrew Smith. The value
included in the table is therefore £1,440,661 (€1,727,051) and £452,710 (€542,704), based on the share price on vesting (1 March 2022) of £6.615 (€7.93), of which £520,729 (€653,361) and £163,632
(€205,310) relates to share price appreciation respectively.
The LTIP awards granted in October 2020 vest after three years subject to an EPS performance condition (measured over a three-year period from 1 January 2020 to 31 December 2022) and relative
TSR performance conditions (measured over a three-year period from 26 October 2020 to 25 October 2023). Based on performance to 31 December 2022, the final vesting outcome under the EPS
condition is 93.4%. However, as we are still partway through the performance period for the relative TSR performance condition, we have used an estimate of the vesting as at 31 December 2022 (equal
to 50% of the relative TSR element, 37.5% of the overall award). Considering both the EPS and estimated relative TSR outcomes, 60.9% of the award is estimated to vest. This performance outcome
corresponds to a total of 332,216 and 49,832 nil cost options for Mor Weizer and Chris McGinnis respectively. The value included in the table for Mor and Chris is therefore £1,690,979 (€1,906,920) and
£253,645 (€286,036), based on the share price on 31 December 2022 of £5.09 (€5.74), of which £474,072 (€564,767) and £71,110 (€84,714) relates to share price appreciation respectively. Further details
on the estimated LTIP outcomes for the 2022 awards are set out on pages 121 and 122. As part of the settlement agreement with Andrew Smith, the Committee determined to settle the in-flight 2022 LTIP
award via a payment of £208,857, based on the time pro-ration between the grant date and the end of his notice period.
5
No awards that were granted to Mor Weizer in December 2019 vested in 2022, compared to 700,000 options that vested in 2021 partially vested during the 2021 financial year, with 300,000 options
vesting on 26 November 2021 and 400,000 options vesting on 14 December 2021. The value included in the table is therefore £2,208,000 (€2,601,000) and £2,906,000 (€3,412,000) respectively,
based on the share prices on vesting of £7.36 (€8.67) and £7.265 (€8.53), of which £1,050,300 (€1,251,000) and £1,362,400 (€1,612,000) relates to share price appreciation.
6
Benefits include private medical insurance, permanent health insurance, car and life assurance.
Playtech plc Annual Report and Financial Statements 2022
119
Remuneration Report Annual report on remuneration continued
120 Playtech plc Annual Report and Financial Statements 2022
Non-executive Directors’ emoluments (in £) (audited)4,5FeesAnnual bonus2BenefitsPensionTotal emolumentsDirector2022202120222021202220212022202120222021Brian Mattingley1470,000277,167——————470,000277,167Ian Penrose3262,000233,219——————262,000233,219Anna Massion3252,000230,719——————252,000230,719John Krumins3252,000230,719——————252,000230,719Linda Marston-Weston1252,00070,000——————252,00070,000Non-executive Directors’ emoluments (in €) (audited)4,5Fees are paid in Sterling and are translated into Euros in the table below:FeesAnnual bonus2BenefitsPensionTotal emolumentsDirector2022202120222021202220212022202120222021Brian Mattingley1545,963326,876——————545,963326,876Ian Penrose3301,726275,111——————301,726275,111Anna Massion3290,041272,108——————290,041272,108John Krumins3290,041272,108——————290,041272,108Linda Marston-Weston1290,04183,126——————290,04183,1261 Brian Mattingley was appointed as Chairman of the Board on 1 June 2021 and Linda Marston-Weston joined the Board on 1 October 2021. 2 Non-executive Directors are not eligible to receive any variable pay under the Remuneration Policy and thus received no variable pay during 2021 and 2022.3 It should also be noted that Ian Penrose, Anna Massion and John Krumins each waived 20% of their fees for five months in 2020 to support the business during the COVID-19 outbreak; however, this was later repaid in February 2021, once the Group’s improved financial performance showed consistent sustainability (the share price had returned to levels last seen in autumn 2018). This is included within the table above.4 The Non-executive Directors did not receive an increase in the year, having had their fees amended on 1 October 2021. Ian Penrose was appointed as Senior Independent Director, effective from 1 October 2021. 5 The Chairman and Non-executive Directors received additional fees in respect of the significant additional work performed in the year, arising from the intense and lengthy corporate activity and global regulatory work. It is estimated that each of the Chairman and Non-executive Directors spent at least an additional 32 days working in 2022 over and above their contracted days. As such, it was determined that an additional fee equating to £132,000 (2021: £120,000) would be payable. This amount was based on the annual fee level for the Senior Independent Director, and then scaled back so that the amount was no more than 10% above the additional fees paid in respect of 2021, despite the more than 50% increase in additional days’ work/commitment. It is not anticipated that additional fees will be payable in respect of 2023. The amounts included in the table above in respect of 2021 have been updated to reflect the additional amounts paid in 2022 in respect of additional work completed during 2021. Determination of 2021 bonus In accordance with the Company’s Remuneration Policy, the CEO and CFO had the opportunity to earn a bonus in respect of 2021 of 200% and 150% of salary respectively. 2021 performance was assessed against a mixture of financial and non-financial targets as set out below. The bonus was payable on a sliding scale of 0% for threshold to 100% for maximum performance.Performance metricWeightingThresholdMaximumActualCEO payout level (% of maximum)CFO payout level (% of maximum)Financial (70%)Adjusted EBITDA (€’m)50%347.0401.5405.650%50%Cash flow (€’m)20%292.0338.0396.920%20%Strategic and non-financial (30%)30%See below30%30%Total100%100%100%As set out in the 2021 Directors’ Remuneration Report, the financial performance targets were divided this year between Adjusted EBITDA and cash flow, with 50% and 20% weightings respectively. The targets for Adjusted EBITDA and cash flow were set cognisant of analyst consensus as at January 2022. Adjusted EBITDA and cash generation are the key financial performance metrics of the Company most closely representing the underlying trading performance of the business. When setting the EBITDA targets for 2022, the Committee and Board took into consideration both consensus estimates and internal forecasts. The financial performance of Playtech was strong in 2022, despite the enormous distractions and challenges faced due to the lengthy takeover activity and corporate transactions. At the beginning of the year, the Committee set challenging metrics for the Executive Directors and reviewed the approach to calibrating performance targets, Following this review, the Committee determined to increase the level of stretch within the targets such that the level of performance required to achieve maximum payouts under the financial targets was to exceed target by 10%. This was an increase on the approach taken in 2021 which required a 5% outperformance of target to achieve maximum payout.Cognisant of consensus forecasts for EBITDA (€331 million), the Committee set target EBITDA (equivalent to a 50% payout under the EBITDA element) at €365 million (10% above consensus), and maximum payout for delivering 110% of target EBITDA of €401.5 million (21% above consensus). Similarly, with consensus forecasts for cash generation being €284 million, the target cash generation was set at €307 million, and maximum payout at €338 million. EBITDA and cash generation was €405.6 million and €396.9 million respectively, which resulted in a maximum payout under both the EBITDA and cash generation elements of the bonus. Remuneration Report The non-financial performance targets (representing 30% of the total
bonus potential) were selected to underpin key strategic objectives
of the Group aligned with the business strategy. The Group made
good progress against many of the key strategic and operational
objectives set at the beginning of the year. The CEO was tasked with
completing the disposal of the Finalto business (2.5%), accelerating
the performance and market positioning of the LATAM business
(5%), continuing to drive the digital growth/channel shift in Snaitech
to improve the quality of earnings and therefore value (7.5%), and
accelerating Playtech’s position in the rapidly growing market in
the United States (5%). The former CFO was tasked with improving
the structure and efficiency of the balance sheet (10%), supporting
the CEO on certain strategic initiatives (5%), and to commence the
overview of the business integration and efficiency plan to drive
material cost efficiencies and additional cash generation in 2023
and particularly 2024 (5%).
In addition, for both the CEO and former CFO, 10% (out of the 30%
potential for non-financial performance measures) was allocated
towards ESG targets. This was a new criteria introduced in 2022, and
is being extended to all members of the senior management team in
2023. These were:
• Safer gambling – continued uptake and development of Playtech
Protect solutions and safer gambling features.
• Environment – continued progress towards our stated emissions
reduction target of 40% scope 1 and 2 emissions target by 2025
(on a 2018 baseline) and supply chain emissions reduction as
compared to a 2020 baseline.
• DEI targets – annual progress towards increasing female leadership
to 35% from a 2021 baseline.
• Reputation, ethics and Compliance – no new material ESG, ethical
or compliance breaches resulting in significant reputational damage
for the Group.
In particular, the Committee took account of the CEO’s exceptional
leadership and social responsibility in facing the ongoing Ukraine
crisis. Playtech has over 700 employees (10%+ of the global
workforce) in Ukraine, and, before and during the invasion, Playtech’s
Crisis Management Group has worked 24/7 to look after our
workforce, provide relocation opportunities to adjacent countries and
provide humanitarian support whilst ensuring the business continues
to operate. The Committee is proud of Playtech’s response to this
awful situation. Finally, it should be noted that the above has been
achieved against the backdrop of continued corporate activity and
takeover approaches which have understandably consumed large
amounts of management time, whilst continuing to deliver record
financial results.
In this context and recognising the significant progress made in
respect of the key strategic, operational and ESG objectives of the
Company, the Committee determined to pay a maximum bonus in
respect of these objectives. When combined with the maximum
payout achieved under the financial targets, the overall bonus payout
for the CEO and former CFO was 100% of maximum.
This amounted to £1.6 million (2021: £1.6m) for the CEO, £613k
(2021: £549k) for the former CFO. As set out in Chair’s statement, the
Remuneration Committee determined to not pro-rate the bonus for
the former CFO in recognition that he was actively employed during
the whole financial year, in reflection of the Board’s request to remain
in the business to support an orderly transition.
No bonus was payable to the new CFO in respect of the one month
of the year served as a Director.
In line with the Policy, 33.3% of these payments will be deferred into
shares for two years for the CEO. In light of the exceptional Company
performance and Andrew Smith’s commitment to the Company until
the year end, the Committee determined that the annual bonus would
be paid in cash for the former CFO.
The Committee is satisfied that the annual bonus payments to
Executive Directors are a fair reflection of corporate and individual
performance during the year.
LTIP vesting in the year
The LTIP awards granted in October 2020 will vest subject to an EPS performance condition (measured over a three-year period from 1 January
2020 to 31 December 2022) and relative TSR performance conditions (measured over a three-year period from 26 October 2020 to 25 October
2023). Based on performance to 31 December 2022, the outcome is expected to be as follows:
Relative TSR – FTSE 250 index
(excluding investment trusts)
(Estimate as at 31 December 2022)
Relative TSR – bespoke
(Estimate as at 31 December 2022)1
Adjusted Diluted EPS (Final)
Total
Weighting
37.5%
37.5%
25%
100%
% of award vesting for
threshold performance
Threshold performance
Maximum performance
Actual performance
Outcome
(% of maximum)
25%
0.3% (median)
25%
52.9% (median)
32.9%
(upper quartile)
60.9%
(upper quartile)
25%
36 Euro cents
51.5 Euro cents
42.9%
100%
0%
93.38%
60.85%
1
The bespoke peer group for the 2020 LTIP awards consisted of 888 Holdings plc, Betsson AB (B shares), Entain plc, International Game Technology plc, Gamesys Group plc, Kindred Group plc, Greek
Organization of Football Prognostics S.A. (OPAP S.A.), Flutter Entertainment plc, Rank Group plc, Sportech plc and William Hill plc.
Awards for Mor Weizer and Andrew Smith vested on 1 March 2022 as follows:
Director
Mor Weizer
Andrew Smith
Original number of awards granted
Number of awards vested
Total value 1
Total value due to share price
appreciation 2
546,000
81,900
332,216
49,832
£1,690,979
£253,645
£474,072
£71,110
1 Based on the share price of £5.09 as at 31 December 2022.
2 Calculated as the share price on 31 December 2022 of £5.09 less the share price on the date of grant of £3.663.
The awards are also subject to a two-year retention period post vesting.
Playtech plc Annual Report and Financial Statements 2022
121
Remuneration Report Annual report on remuneration continued
LTIP vesting in the year continued
As part of the settlement agreement with Andrew Smith, the Committee determined to settle the in-flight 2022 LTIP award via a cash payment
of £208,857, based on the time pro-ration between the grant date and the end of his notice period. The Committee determined that this was
appropriate as the granting of the award was delayed from the normal timescales as a result of continued corporate activity that resulted in a
close period of over 12 months.
One-off award approved by shareholders in 2019
Tranche
Number of awards granted
Share price target
Performance period (years)
Share price target achieved
A
B
C
D
300,000
400,000
500,000
700,000
£6.00
£7.00
£8.00
£12.00
3
3
3
5
Yes
Yes
No
No
Vesting date
26/11/2021
14/12/2021
Lapsed
N/A
Accordingly, tranche C lapsed during the year as a result of the share price target of £8.00 not being met. Tranche D has until 19 December 2024
to be achieved.
LTIP awards (audited)
On 19 August 2022 the following awards were made to the Executive Directors (including Chris McGinnis prior to his appointment as a Director)
under the LTIP:
Director
Aggregate market value (£) 1
Total number of awards
Type of award
Mor Weizer
Andrew Smith
Chris McGinnis
Nil cost option
Nil cost option
Cash-based award
351,724
144,041
—
1,632,000
668,350
300,000
Awards represented 200% of salary for Mor Weizer and 150% of salary for Andrew Smith based on a share price on grant of 464 pence.
There has been no change in the exercise price or date since the awards were granted.
The 2022 LTIP awards for Mor Weizer and Andrew Smith are subject to the following performance conditions:
Measure
EPS growth
Relative TSR – FTSE 250
(excluding investment trusts)
Weighting
25%
37.5%
Relative TSR – Bespoke Peer Group1
37.5%
% of award vesting
for threshold
performance
Threshold
Maximum
Performance period
0%
10% p.a. compounded
15% p.a. compounded
01.01.2022-31.12.2024
25%
25%
Median of the
comparator group
Upper quartile of the
comparator group
Median of the
comparator group
Upper quartile of the
comparator group
19.08.2022-18.08.2025
19.08.2022-18.08.2025
1
The bespoke peer group for the 2022 LTIP awards consisted of 888 Holdings plc, Aristocrat Leisure Limited, Betsson AB (B shares), DraftKings A, Entain plc, Evolution AB, Flutter Entertainment plc,
International Game Technology plc, Kindred Group plc, Light & Wonder inc, Greek Organization of Football Prognostics S.A. (OPAP S.A.), and Rank Group plc.
For Chris McGinnis, the award is subject to the following performance conditions:
Measure
Adjusted EBITDA growth
Relative TSR – FTSE 250
(excluding investment trusts)
Weighting
25%
37.5%
Relative TSR – Bespoke Peer Group 1
37.5%
1 As set out above.
% of award vesting
for threshold
performance
Threshold
Maximum
Performance period
0%
10% p.a. compounded
15% p.a. compounded
01.01.2022-31.12.2024
25%
25%
Median of the
comparator group
Upper quartile of the
comparator group
Median of the
comparator group
Upper quartile of the
comparator group
19.08.2022-18.08.2025
19.08.2022-18.08.2025
For performance between threshold and maximum, vesting will be determined on a straight-line basis. Any vesting will further be dependent on the
Committee ensuring that the level of TSR performance achieved is consistent with the underlying performance of Playtech over the performance period.
Leaving arrangements for former CFO
Andrew Smith stepped down from the Board at the end of November 2022, and had contributed fully to the record performance of the business
in the year.
The Board wanted Chris McGinnis to be appointed as the CFO at the end of November 2022 to allow him time to be fully prepared for the year
end. However, the Board asked Andrew Smith to remain involved in the business during December, and to be available to the business in the
first half of 2023 (during his six-month notice period) to assist in an orderly transition at this important time for year-end financial reporting and
controls. As a consequence, when assessing the compensation for loss of office, the Remuneration Committee treated Andrew Smith as giving
his notice on 31 December 2022 and being available for work during his notice period.
122 Playtech plc Annual Report and Financial Statements 2022
Remuneration Report Playtech plc Annual Report and Financial Statements 2022
123
The Remuneration Committee determined the following treatment to his variable remuneration. 2022 annual bonusAs Andrew Smith actively worked for the whole of the financial year due to providing ongoing support during December 2022, the Remuneration Committee determined that he would be entitled to a full year’s annual bonus with no time pro-ration to reflect his time served during the year as a Director. Following the normal assessment of performance, Andrew Smith received an annual bonus payment of £668,351, of which £55,696 (1 month) was in respect of the period of employment whilst not a Director.2020 LTIPThe in-flight LTIP award that was granted in October 2020 will vest in accordance with the normal timescales and be subject to performance. Given that the granting of these awards was delayed from the usual grant date in March due to the Remuneration Committee pausing the grant due to the impact of COVID-19, it was agreed that the time pro-rating for this award would be disapplied as Andrew Smith will have served a full three-year term based on the normal LTIP grant cycle, taking into account his notice period.In addition, as part of the settlement agreement, it was agreed that the 2020 LTIP award would be underpinned to vest at least equal to two thirds of maximum for Andrew Smith, cognisant of an interim assessment of performance as at the date of his stepping down from the Board (c.92% of maximum vesting).The value of this award at vesting will be disclosed in the 2023 Directors’ Remuneration Report.Compensation for Loss of OfficeThe Compensation for Loss of Office is set out below:• £222,783 in respect of salary between 1 December 2022 and 31 May 2023, of which £185,653 relates to the financial year ending 31 December 2023.• £45,690 in respect of pension and benefits between 1 December 2022 and 31 May 2023, of which £38,074 relates to the financial year ending 31 December 2023. • £37,131 payable on 31 May 2023 in respect of the employee’s loss of employment rights.No payments other than those set out above were made to past Directors in 2022.Implementation of Policy for 2023This section sets out the proposed implementation of the Directors’ Remuneration Policy in 2023. The proposed implementation does not contain any deviations from the Directors’ Remuneration Policy approved by shareholders at the 2021 AGM.Salary and fee reviewAs stated last year, salary reviews for the Executive Directors take place at the beginning of the calendar year as this will result in the alignment of salary reviews with the Company’s financial year.Accordingly, the Committee reviewed the salary for Mr Weizer, and it was decided that Mr Weizer would receive a salary increase of 3.5%, effective from 1 January 2023. The average salary increase for 2023 awarded to those employees across the UK workforce who were eligible for a salary increase was 8.1%. As stated previously, Mr McGinnis, who was appointed CFO on 28 November 2022, did not receive a salary increase on 1 January 2023, but will receive an increase to £400,000 on 1 July 2023. He will then not receive an increase until 1 January 2025.The Committee has commissioned a market benchmarking exercise for all of the roles within its remit, including those in the wider senior management team, and will reflect on the results of this as well as pay and conditions across the wider workforce when considering any further amendments to salary levels next year.It was also determined that the fee for the Chairman should increase by 3.5%, in line with the CEO and significantly below the 8.1% average salary increase awarded to those employees across the UK workforce who were eligible for a salary increase. The Board decided that the fees for the Non-executive Directors and Senior Independent Director should be increased, proportionate with the increased time commitment of these roles to reflect their close involvement in improved business performance, with improved oversight in the running of the business and focus on improving governance across the business, committees and global regulation. The Board wanted to maintain the current high level of engagement of the NEDs in the business, both in the UK and overseas, and to stop the payment of additional fees for additional time spent, except in exceptional circumstances.As such, the current basic salary levels of the Executive and Non-executive Directors from 1 January 2023 (together with the Euro equivalent at 31 December 2022 based on the exchange rate between Sterling and Euro used in the accounts) are: • Mor Weizer: £844,560 (€971,515);• Chris McGinnis: £350,000 (€402,612).• Chairman: £350,000 (€402,612); • Non-executive Director base fee: £140,000 (€160,771);• Additional Committee Chair fee: £15,000 (€17,255); and• Senior Independent Director fee: £160,000 (€184,051).BenefitsBenefit will continue to be in line with the approved Policy. PensionThe pension contributions to Executive Directors will be 7.5% of salary, which is in line with the wider workforce.Annual bonusThe annual bonus opportunity will remain unchanged at 200% of salary for the CEO and 150% of salary for the CFO.For 2023, bonuses for the Executive Directors will be based on the following: WeightingPerformance targetAdjusted EBITDA50%Commercially confidentialCash flow20%Commercially confidentialNon-financial and strategic objectives30%Commercially confidentialThe Adjusted EBITDA and cash flow targets have been set above City consensus in line with the business plan. Maximum payout for achieving the financial targets has been set for achieving 110% of the stretching target level. The Committee considers the precise targets to be commercially confidential at this time, but these will be disclosed retrospectively in next year’s Annual Report on Remuneration.Following the successful introduction of ESG measures in 2022, the Committee has again set ESG measures for the 2023 bonus, including measures relating to safer gambling, diversity and reduction of the Company’s Scope 1, Scope 2 and supply chain emissions.The level of bonus payable by reference to the financial performance of the Company will be determined on a sliding scale. There will be retrospective disclosure of the targets and performance in next year’s report.Remuneration Report Annual report on remuneration continued
Implementation of Policy for 2023 continued
Annual bonus continued
The annual bonus will be subject to recovery and withholding provisions in relation to material misstatement, gross misconduct, or material
error in calculation, for a serious reputational event and in the event of corporate failure. These provisions will apply for a period of three years
after payment.
In line with the proposed Policy, 33.3% of any bonus earned will be payable in deferred shares.
Long Term Incentive Plan (LTIP)
In line with the normal schedule, the Committee intends to grant LTIP awards this year at 200% of salary for the CEO and 150% for the CFO.
Awards made to Executive Directors will vest on the third anniversary of grant subject to (i) participants remaining in employment (other than in
certain “good leaver” circumstances) and (ii) achievement of challenging performance targets. The awards will be subject to relative TSR and
adjusted EPS performance. Full details of the performance targets will be disclosed at the time the awards are made and will be in line with the
current Remuneration Policy.
Any vesting will also be dependent on the Committee ensuring that the level of performance achieved is consistent with the underlying financial
performance of Playtech over the performance period.
LTIP awards will be subject to a two-year retention period post vesting.
LTIP awards will be subject to recovery and withholding provisions in relation to material misstatement, gross misconduct or material error
in calculation, for a serious reputational event and in the event of corporate failure. These provisions will apply for a period of three years
post vesting.
Dilution limits
All of the Company’s equity-based incentive plans incorporate the current Investment Association Guidelines on headroom which provide that
overall dilution under all plans should not exceed 10% over a ten-year period in relation to the Company’s issued share capital (or reissue of
treasury shares), with a further limitation of 5% in any ten-year period for executive plans. The Committee monitors the position and prior to the
making of any award considers the effect of potential vesting of options or share awards to ensure that the Company remains within these limits.
Any awards which are required to be satisfied by market purchased shares are excluded from such calculations. As at 31 December 2022 we
hold 2,937.550 Treasury Shares. As at 1 January 2022, we held 2,937,550 shares in Treasury.
Review of performance
The following graph shows the Company’s total shareholder return (TSR) performance over the past ten years; the Company’s TSR is compared
with a broad equity market index. The index chosen here is the FTSE 250, which is considered the most appropriate published index.
300
250
200
150
100
50
0
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
The Remuneration Committee believes that the Remuneration Policy and the supporting reward structure provide a clear alignment with
the strategic objectives and performance of the Company. To maintain this relationship, the Remuneration Committee constantly reviews
the business priorities and the environment in which the Company operates. The table below shows the total remuneration of Mor Weizer
over the last ten years and annual variable and long-term incentive pay awards as a percentage of the plan maxima.
Playtech
FTSE 250
124 Playtech plc Annual Report and Financial Statements 2022
Remuneration Report Playtech plc Annual Report and Financial Statements 2022
125
Remuneration of the CEO (Mor Weizer)2013201420152016201720182019202020212022Total remuneration (€’000)1,3811,7402,4492,346 4,192 2,0552,9311,90510,8024,950Annual bonus (% of maximum)100%100%87.5%100%93%25%65%24%100%100%LTIP vesting (% of maximum)1————70%22%——46.16%60.9%1 As disclosed above, the LTIP award granted in 2020 is based on relative TSR performance until 25 October 2023, and therefore this figure represents the known EPS vesting and an estimate of the relative TSR vesting as at 31 December 2022.Percentage change in remuneration of Directors compared with employees1The following table sets out the percentage change in the salary/fees, benefits and bonus for each Director from 2020 to 2022 compared with the average percentage change for employees. All percentages are calculated based on the GBP value of pay, as this reflects how pay is set, ignoring the impact of exchange rate fluctuations. The increases, as detailed in this Report, reflect the additional time spent on the business during the intense period of activity during the last two years.Salary/feesBenefitsBonus2019 to 20202020 to 20212021 to 20222019 to 20202020 to 20212021 to 20222019 to 20202020 to 20212021 to 2022Executive DirectorsMor Weizer0%-20.0%+2.0%+31.6% 3-1.6%+10.5%-63.1%+233.3%+2.0%Andrew Smith+2.5%+0%-5.1%4+75.3% -41.0%-5.2%-64.3%+254.2%+11.6%Chris McGinnisN/AN/AN/AN/AN/AN/AN/AN/AN/ANon-executive Directors2,5Brian MattingleyN/AN/A+69.6%6N/AN/AN/AN/AN/AN/AIan Penrose +2.5%+116.7%+12.3%N/AN/AN/AN/AN/AN/AAnna Massion+2.5%+114.4%+9.2%N/AN/AN/AN/AN/AN/AJohn Krumins+2.5%+114.4%+9.2%N/AN/AN/AN/AN/AN/ALinda Marston-WestonN/AN/A+260.0%6N/AN/AN/AN/AN/AN/AWider workforceAverage employee – UK based+2.7%+4.5%+11%+6%+0.8%+9.4%+22%-15.6%+83%1 Playtech plc has no employees. The UK workforce was chosen as a comparator group as the Remuneration Committee looks to benchmark the remuneration of the Chief Executive Officer with reference mainly to the UK market (albeit that he has a global role and responsibilities, and remuneration packages across the Group vary widely depending on local market practices and conditions). 2 The percentage change figures shown above between 2020 and 2021 for the Non-executive Directors have been updated to reflect additional fees paid during 2022 in respect of additional time commitment during 2021. 3 The increase in the value of Mor Weizer’s benefits was due to the provision of a fully expensed company car.4 The decrease in the value of Andrew Smith’s salary was due to him stepping down from the Board during the year.5 The increase for the Non-executive Directors reflects additional fees paid in respect of the significant additional work performed in the year.6 The increase in the value of Brian Mattingley and Linda Marston-Weston’s fees was due to their appointment to the Board part way through 2021.Pay ratio information in relation to the total remuneration of the Director undertaking the role of Chief Executive OfficerThe table below compares the single total figure of remuneration for the Chief Executive Officer with that of the Group employees who are paid at the 25th percentile (lower quartile), 50th percentile (median) and 75th percentile (upper quartile) of its UK employee population between 2019 and 2022:YearMethodology25th percentile pay ratioMedian pay ratio75th percentile pay ratio2022Method A114:175:151:12021Method A229:1160:1107:12020Method A43:131:121:12019Method A73:152:135:1The employees included are those employed on 31 December 2022 and remuneration figures are determined with reference to the financial year to 31 December 2022. The CEO is paid in GBP Sterling and the ratios have been calculated using the CEO’s 2022 total single figure of remuneration expressed in GBP Sterling (£4.28 million). Option A, as set out under the reporting regulations, was used to calculate remuneration for 2022, in line with the approach taken in 2021, as we believe that that is the most robust methodology for calculating these figures. The value of each employee’s total pay and benefits was calculated using the single figure methodology consistent with the CEO, with the exception of annual bonuses, where the amount paid during the year was used (i.e. in respect of the 2021 financial year) as 2022 employee annual bonuses had not yet been determined at the time this report was produced. No elements of pay have been omitted. Where required, remuneration was approximately adjusted to be on a full-time and full-year equivalent basis based on the employee’s contracted hours and the proportion of the year they were employed.Remuneration Report Annual report on remuneration continued
Pay ratio information in relation to the total remuneration of the Director undertaking the role of Chief Executive
Officer continued
The table below sets out the salary and total pay and benefits for the three quartile point employees:
50th percentile
25th percentile
75th percentile
Salary
Total pay
and benefits
Salary
Total pay
and benefits
Salary
Total pay
and benefits
2022
£33,000
£37,728
£55,000
£56,860
£75,769
£83,813
The Committee considers that the median CEO pay ratio is consistent with the relative roles and responsibilities of the CEO and the identified
employee. Base salaries of all employees, including our Executive Directors, are set with reference to a range of factors including market
practice, experience and performance in role. The CEO’s remuneration package is weighted towards variable pay (including the annual bonus
and LTIP) due to the nature of the role, and this means the ratio is likely to fluctuate depending on the outcomes of incentive plans in each year.
The Committee also recognises that, due to the flexibility permitted within the regulations for identifying and calculating the total pay and benefits
for employees, as well as differences in employment and remuneration models between companies, the ratios reported above may not be
comparable to those reported by other companies.
Relative importance of spend on pay
The following table sets out the amounts paid in share buybacks and dividends, and total remuneration paid to all employees:
Payouts
Dividends
Share buybacks
Total employee remuneration1
2022
€’ m
—
—
435.0
2021
€’ m
—
—
384.6
Change
%
0%
0%
+13.1%
1
Total employee remuneration for continuing and discontinued operations includes wages and salaries, social security costs, share-based payments and pension costs for all employees, including
the Directors.
Directors’ interests in ordinary shares (audited)
Director
Executive Directors2,3,4,7
Mor Weizer1,5
Andrew Smith5,6
Chris McGinnis
Non-executive Directors7
Brian Mattingley
Ian Penrose
Anna Massion
John Krumins
Linda Marston-Weston
Ordinary shares
Share awards and share options
31 December
2022
2021
2022
2021
Total interests at
December 2022
332,050
55,143
5,000
—
17,500
32,000
18,000
—
277,550
84,875
5,000
—
17,500
32,000
10,000
—
2,863,949
256,113
81,900
3,012,225
324,550
122,963
3,195,999
311,256
86,900
—
—
—
—
—
—
—
—
—
—
—
17,500
32,000
18,000
—
1 The CEO’s share ownership is 207% of salary based on the closing share price of 509 pence on 31 December 2022.
2 Share options are granted for nil consideration.
3
4
5
These options were granted in accordance with the rules of the Playtech Long Term Incentive Plan 2012 or the Playtech Long Term Incentive Plan 2022 (the “Option Plans”). Options under the Option
Plans are granted as nil cost options and in the case of Executive Directors exclusively, the options vest and become exercisable on the third anniversary of the notional grant date. Unexercised
options expire ten years after the date of grant, unless the relevant employee leaves the Group’s employment, in which case the unvested options lapse and any vested options lapse three months
after the date that the employment ends.
No LTIP awards were granted in 2021.
Mr Weizer and Mr Smith were each granted an award in 2022 over 351,724 and 144,041 shares respectively. The Adjusted EPS performance condition is based over the financial year ending
31 December 2024, whilst the relative TSR performance conditions are based over the period of 19 August 2022 to 18 August 2025 with normal vesting scheduled for 18 August 2025. As set
out on page 122, the awards granted to Mr Smith lapsed on cessation as part of the settlement agreement.
6
The figures for Mr Smith have been illustrated at the date at which he stepped down from the Board (28 November 2022).
7 There was no movement in share interests between 31 December 2022 and the date of publication.
126 Playtech plc Annual Report and Financial Statements 2022
Remuneration Report Playtech plc Annual Report and Financial Statements 2022
127
Role and membership The Remuneration Committee is currently comprised entirely of three independent Non-executive Directors as defined in the Code. Ian Penrose chairs the Committee, and the other members are Linda Marston-Weston and Anna Massion. Details of attendance at the Remuneration Committee meetings are set out on page 101 and their biographies and experience on pages 96 to 97. The Committee operates within agreed terms of reference detailing its authority and responsibilities. The Committee’s terms of reference are available for inspection on the Company’s website, www.playtech.com, and include: • determining and agreeing the Policy for the remuneration of the CEO, the CFO, the Chairman and other members of the senior management team;• reviewing the broad Policy framework for remuneration to ensure it remains appropriate and relevant;• reviewing the design of and determining targets for any performance-related pay and the annual level of payments under such plans;• reviewing the design of and approving any changes to long-term incentive or option plans; and• ensuring that contractual terms on termination and payments made are fair to the individual and the Company and that failure is not rewarded.The Remuneration Committee also considers the terms and conditions of employment and overall remuneration of Executive Directors, the Company Secretary and members of the senior management team and has regard to the Company’s overall approach to the remuneration of all employees. Within this context the Committee determines the overall level of salaries, incentive payments and performance-related pay due to Executive Directors and senior management. The Committee also determines the performance targets and the extent of their achievement for both annual and long-term incentive awards operated by the Company and affecting the senior management. In order to manage any potential conflicts of interest, no Director is involved in any decisions as to his/her own remuneration.The Remuneration Committee takes advice from both inside and outside the Group on a range of matters, including the scale and composition of the total remuneration package payable to people with similar responsibilities, skills and experience in comparable companies, sectors and geographies that have extensive operations inside and outside the UK. A benchmarking exercise of the highest paid 20 individuals has recently been undertaken, to provide assurance that the remuneration levels and structures remain appropriate.During the year the Remuneration Committee received assistance and advice from the Company Secretary, Brian Moore (who is also secretary to the Committee). The Remuneration Committee has a planned schedule of at least three meetings throughout the year, with additional meetings and zoom calls held when necessary. During 2022, the Committee met ten times, addressing a wide variety of issues, including: MonthPrincipal activityJanuary and February• Review of bonus and other incentivisation arrangements in relation to Executive Directors and members of senior management• Review of pay increases for 2022• Consideration of ongoing corporate takeover activity on staff morale and incentivisation with the ongoing close period and uncertain futureMay, June and July• Consideration of voting at AGMAugust, September and October• Discussions to introduce ESG component to senior management team bonuses• Review of long-term bonus proposals for over 400 members of the team• Consideration of remuneration package for the incoming CFO, and the terms of the compensation for loss of office of the former CFONovember and December• Review of long-term financial and bonus targets for Snaitech in Italy• Consideration of remuneration matters for 2023External advisersAs a result of PricewaterhouseCoopers LLP’s (PwC’s) appointment as reporting accountant in relation to Finalto during 2020, the firm stood down as independent adviser to the Committee. Following the completion of the sale of Finalto in 2022, later in 2022 PwC were reappointed as the independent adviser to the Committee. PwC is a member of the Remuneration Consultants Group and, as such, voluntarily operates under the code of conduct in relation to executive remuneration consulting in the UK. Total fees for advice provided to the Committee were £69,200 on a time and materials basis.Remuneration Report Annual report on remuneration continued
Engagement with shareholders and shareholder voting
At the 2022 AGM the total votes received in favour of resolution for
the Remuneration Report were 69.67%. Following the AGM and
throughout the year during the takeover period and discussions, the
Group has continued to engage with shareholders. The principal
reason given by those shareholders who were unable to support
the resolutions related to payouts under the one-off equity incentive
scheme approved in 2019. Shareholders were more supportive of the
changes to remuneration implemented since 2021 and therefore the
Committee has not made any changes to how it operates the ongoing
Remuneration Policy during 2022.
The Directors’ Remuneration Policy and the Directors’ Annual Report
on Remuneration were each subject to a shareholder vote at the AGM
held on 26 May 2021 and 30 June 2022 respectively, the results of
which were as follows:
For
Against
Withheld
Furthermore, and working in conjunction with the ESG Committee,
several discussions were held reviewing the Company’s approach to
diversity and inclusion, followed by setting the Company goals and
targets in this area.
During 2022, the Board discussed, reviewed and engaged on a
number of stakeholder issues. The material stakeholder topics
discussed by the Board in 2022 included:
• executive compensation and pay;
• environmental, social and governance matters;
• developing the business in markets;
• corporate governance;
• diversity;
•
inclusion and gender pay gap and regulatory and compliance
developments;
Approval of
Remuneration Report
Approval of
Remuneration Policy
166,001,674
72,258,663
107,756
(69.67%)
(30.33%)
177,453,581
57,668,932
155,838
(75.47%)
(24.53%)
• safer gambling;
• data protection;
• environment;
• anti-money laundering and anti-bribery and corruption;
• human rights and modern slavery;
• responsible supply chain and procurement; and
• commercial developments with B2B licensees and third parties.
By order of the Board
Ian Penrose
Chair of the Remuneration Committee
23 March 2023
Engagement with the wider workforce
With respect to employee engagement, the Board and Chairman of
the Remuneration Committee engages with the COO of B2B, the CEO
of Snaitech and Global Head of Human Resources on strategic and
operational issues affecting and of interest to the workforce, including
remuneration, talent pipeline and diversity and inclusion. The COO
and CEO are standing attendees at the Board meetings. In addition,
the Company has established a Speak Up hotline, which enables
employees to raise concerns confidentially and independently of
management. Any concerns raised are reported into the Head of
Legal and Head of Compliance for discussion and consideration by
the Risk Committee. The Board considers the current mechanisms
appropriate for understanding and factoring in stakeholder concerns
into plc level decision making. However, the Board will assess whether
additional mechanisms can strengthen its understanding and
engagement of stakeholder concerns in the future.
Specifically, wide-ranging discussions were held around
remuneration, reviewing benchmarking data about the
competitiveness of Playtech’s basic pay levels compared to peer
groups and geographies. Bonus targets and quanta were reviewed to
continue to improve the alignment of individual and Group operating
and strategic performance. The Committee also took the opportunity
to consider the list of team members who historically have been
eligible for an LTIP grant, to ensure that this element of aligning
employee and shareholder interests remains appropriate. There
was significant engagement around the wide-ranging implications
of the Takeover Offer by Aristocrat for the Company, the subsequent
corporate activity around other potential acquirers, and also around
the uncertainties created for the business and its employees by the
numerous items of corporate activity that affected the Company
throughout much of 2021 and 2022.
128 Playtech plc Annual Report and Financial Statements 2022
Remuneration Report Directors’ report
The Directors are pleased to present to shareholders their
report and the audited financial statements for the year ended
31 December 2022.
Directors and Directors’ indemnity
The Directors of the Company who held office during 2021 and to
date are:
The Directors’ Report should be read in conjunction with the
other sections of this Annual Report: the Strategic Report,
including Responsible Business and Sustainability Report and the
Remuneration Report, all of which are incorporated into this Directors’
Report by reference.
The following also form part of this report:
• the reports on corporate governance set out on pages 94 to 134;
•
information relating to financial instruments, as provided in the
notes to the financial statements; and
• related party transactions as set out in Note 36 to the financial
Brian Mattingley
Mor Weizer
Andrew Smith
Ian Penrose
Anna Massion
John Krumins
Linda Marston—Weston
Chris McGinnis
Samy Reeb
Appointed
Resigned
01.06.2021
02.05.2007
10.01.2017
01.09.2018
02.04.2019
02.04.2019
01.10.2021
28.11.2022
04.01.2023
—
—
28.11.2022
—
—
—
—
—
—
statements.
Annual Report and Accounts
The Directors are aware of their responsibilities in respect of the
Annual Report. The Directors consider that the Annual Report,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s
performance, business model and strategy. The Statement of
Directors’ Responsibilities appears on page 134.
Principal activities and business review
The Group 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. As of June
2018, through the acquisition of Snaitech, the Group directly owns
and operates a leading sports betting and gaming brand in online and
retail in Italy.
Finalto
In September 2021, the Company announced that it had entered into
an agreement with a purchaser, an investment vehicle incorporated
in the Cayman Islands, to dispose of the Group’s Financials Division,
named Finalto (formerly TradeTech Group) business for a total
consideration of $250 million. The resolution to sell the Finalto
business was put to shareholders on 1 December 2021 and was duly
passed. In July 2022, the Company announced the completion of an
all-cash sale of Finalto to Gopher Investments for an enterprise value
of $250 million.
Playtech plc is a public listed company, with a premium listing on the
Main Market of the London Stock Exchange. It is incorporated in the
Isle of Man and domiciled in the UK.
The information that fulfils the requirement for a management report
as required by Rule 4.1.5 of the Disclosure Guidance and Transparency
Rules applicable to the Group can be found in the Strategic Report
on pages 2 to 92 which also includes an analysis of the development,
performance and position of the Group’s business. A statement of the
key risks and uncertainties facing the business of the Group at the end
of the year is found on pages 85 to 90 of this Annual Report and details
of the policies and the use of financial instruments are set out in Note 5
to the financial statements.
All of the current Directors will stand for election and/or re-election at
the forthcoming Annual General Meeting to be held on 24 May 2023.
Save as set out in Note 36 to the financial statements, no Director
had a material interest in any significant contract, other than a service
contract or contract for services, with the Company or any of its
operating companies at any time during the year.
The Company also purchased and maintained throughout 2022
Directors’ and Officers’ liability insurance in respect of itself and
its Directors.
Corporate governance statement
The Disclosure Guidance and Transparency Rules require certain
information to be included in a corporate governance statement in
the Directors’ Report. Information that fulfils the requirements of the
corporate governance statement can be found in the Governance
Report on pages 94 to 134 and is incorporated into this report by reference.
Disclaimer
The purpose of these financial statements (including this report) is to
provide information to the members of the Company. The financial
statements have been prepared for, and only for, the members of
the Company, as a body, and no other persons. The Company, its
Directors and employees, agents and advisers do not accept or
assume responsibility to any other person to whom this document is
shown or into whose hands it may come and any such responsibility or
liability is expressly disclaimed.
The financial statements contain certain forward-looking statements
with respect to the operations, performance and financial condition of
the Group. By their nature, these statements involve uncertainty since
future events and circumstances can cause results and developments
to differ materially from those anticipated. The forward-looking
statements reflect knowledge and information available at the date
of preparation of these financial statements and the Company
undertakes no obligation to update these forward-looking statements.
Nothing in this document should be construed as a profit forecast.
Results and dividend
The results of the Group for the year ended 31 December 2022 are
set out on pages 144 to 215. The Company is not recommending the
payment of a final dividend for the year ended 31 December 2022.
This situation will be reviewed throughout 2023.
Playtech plc Annual Report and Financial Statements 2022
129
Governance Report Directors’ report continued
Going concern, viability, responsibilities and disclosure
Capital structure
The current activities of the Group and those factors likely to affect its
future development, together with a description of its financial position,
are described in the Strategic Report. Critical accounting estimates
affecting the carrying values of assets and liabilities of the Group are
discussed in Note 6 to the financial statements.
The principal and emerging risks are set out in detail in the Strategic
Report on pages 85 to 90 together with a description of the ongoing
mitigating actions being taken across the Group. The Board carries
out a robust assessment of these risks on an annual basis, with
regular updates being presented at Board and Board Committee
meetings. These meetings receive updates from Finance, Legal,
Tax, Operations, Internal Audit, Regulatory and Compliance, Data
Protection, Human Resources, IT Security and Group Secretariat.
The Group maintains a risk register which is monitored and reviewed
on a continuous basis.
During 2022, the Board carried out an assessment of these principal
risks facing the Group, including those factors that would threaten its
future performance, solvency or liquidity. This assessment considered
the current situation around the potential impact of the Ukraine crisis.
This ongoing assessment forms part of the Group’s strategic plan.
After making appropriate enquiries and having regard to the
Group’s cash balances and normal business planning and control
procedures, to include a detailed analysis of various scenarios,
the Directors have a reasonable expectation that the Company
and the Group have adequate resources to continue in operational
existence and meet their liabilities for a period of at least 15 months
from the date of approval of the financial statements. In respect of
the viability assessment, the Directors reviewed a five-year forecast
considering the viability status for the period to December 2027 in
accordance with the Group’s five-year plan, which is considered
to be an appropriate period over which the Group can predict its
revenue, cost base and cash flows with a higher degree of certainty,
as opposed to more arbitrary forms of forecasts based solely on
percentage increases. Notwithstanding projected profitability over
the forecast period, the Directors have no reason to believe that the
Group’s viability will be threatened over a period longer than that
covered by the positive confirmation of long-term viability as per the
Viability Statement on pages 91 and 92. Given the above, the Directors
continue to adopt the going concern basis in preparing the accounts.
Significant shareholdings
As of 21 March 2023, the Company had been advised of the following
significant shareholders each holding more than 3% of the Company’s
issued share capital, based on 306,356,693 ordinary shares in issue
(excluding treasury shares of 2,937,550):
Shareholder
No. of ordinary shares
%
Interactive Brokers (EO)
Albula Investment Fund
Setanta Asset Management
TT Bond Partners
Future Capital Group
Paul Suen Cho Hung
Vanguard Group
Blackrock
Dr Choi Chiu Fai Stanley
Dimensional Fund Advisors
6.23
5.42
4.99
4.97
4.90
4.61
4.50
3.89
3.75
3.38
19,081,076
16,594,432
15,307,229
15,237,921
15,000,000
14,115,010
13,784,973
11,925,947
11,517,241
10,353,214
As at 28 February 2023, the Company had 309,294,243 issued
shares of no-par value, of which 2,937,550 are held as treasury shares.
The Company has one class of ordinary share and each share carries
the right to one vote at general meetings of the Company and to
participate in any dividends declared in accordance with the articles
of association. No person has any special rights of control over the
Company’s share capital.
The authorities under the Company’s articles of association granted
at the last Annual General Meeting for the Directors to issue new
shares for cash and purchase its own shares remain valid until
the forthcoming Annual General Meeting when it is intended that
resolutions will be put forward to shareholders to renew the authority
for the Company to issue shares for cash and purchase its own shares.
Articles of association
The articles of association contain provisions similar to those which
are contained within the articles of association of other companies
in the gambling industry, namely to permit the Company to (i) restrict
the voting or distribution rights attaching to ordinary shares or (ii)
compel the sale of ordinary shares if a “Shareholder Regulatory
Event” (as defined in the articles of association) occurs. A Shareholder
Regulatory Event would occur if a holder of legal and/or beneficial
interests in ordinary shares does not satisfactorily comply with a
regulator’s request(s) and/or the Company’s request(s) in response
to regulatory action and/or the regulator considers that such
shareholder may not be suitable (a determination which in all practical
effects is at the sole discretion of such regulator), to be the holder of
legal and/or beneficial interests in ordinary shares. Accordingly, to the
extent a relevant threshold of ownership is passed, or to the extent any
shareholder may be found by any such regulator to be able to exercise
significant and/or relevant financial influence over the Company and
is indicated by a regulator to be unsuitable, a holder of an interest in
ordinary shares may be subject to such restrictions or compelled
to sell its ordinary shares (or have such ordinary shares sold on
its behalf).
Voting rights
Subject to any special rights or restrictions as to voting attached to
any shares by or in accordance with the articles of association, on a
show of hands every member who is present in person or by proxy
and entitled to vote has one vote and on a poll every member who
is present in person or by proxy and entitled to vote has one vote for
every share of which he is the holder.
Restrictions on voting
No member shall, unless the Board otherwise determines, be entitled
to vote at a general meeting or at any separate meeting of the holders
of any class of shares, either in person or by proxy, in respect of any
share held by him or to exercise any right as a member unless all
calls or other sums presently payable by him in respect of that share
have been paid to the Company. In addition, any member who having
been served with a notice by the Company requiring such member to
disclose to the Board in writing, within such reasonable period as may
be specified in such notice, details of any past or present beneficial
interest of any third party in the shares or any other interest of any kind
whatsoever which a third party may have in the shares, and the identity
of the third party having or having had any such interest, fails to do so
may be disenfranchised by service of a notice by the Board.
Transfer
The persons set out in the table above have notified the Company
pursuant to Rule 5 of the Disclosure Guidance and Transparency
Rules of their interests in the ordinary share capital of the Company.
The Company has not been notified of any changes to the above
shareholders between 21 March 2023 and the date of this report.
Subject to the articles of association, any member may transfer all or
any of his or her certificated shares by an instrument of transfer in any
usual form or in any other form which the Board may approve. The
Board may, in its absolute discretion, decline to register any instrument
of transfer of a certificated share which is not a fully paid share or on
130 Playtech plc Annual Report and Financial Statements 2022
Governance Report which the Company has a lien. The Board may also decline to register
a transfer of a certificated share unless the instrument of transfer is:
(i) delivered for registration to the registered agent, or at such other
place as the Board may decide, for registration; and (ii) accompanied
by the certificate for the shares to be transferred except in the case
of a transfer where a certificate has not been required to be issued
by the certificate for the shares to which it relates and/or such other
evidence as the Board may reasonably require to prove the title of the
transferor and the due execution by him of the transferor, if the transfer
is executed by some other person on his behalf, the authority of that
person to do so, provided that where any such shares are admitted to
AIM, the Official List maintained by the UK Listing Authority or another
recognised investment exchange.
Amendment of the Company’s articles of association
Any amendments to the Company’s articles of association may be
made in accordance with the provisions of the Isle of Man Companies
Act 2006 by way of special resolution.
Appointment and removal of Directors
Unless and until otherwise determined by the Company by ordinary
resolution, the number of Directors (other than any alternate Directors)
shall not be less than two and there shall be no maximum number
of Directors.
Powers of Directors
Subject to the provisions of the Isle of Man Companies Act 2006,
the memorandum and the articles of association of the Company
and to any directions given by special resolution, the business of the
Company shall be managed by the Board, which may exercise all the
powers of the Company.
ordinary resolution, appoint another person who is willing to act as
a Director in his place. A Director may also be removed from office
by the service on him of a notice to that effect signed by all the
other Directors.
Significant agreements
There are no agreements or arrangements to which the Company
is a party that are affected by a change in control of the Company
following a takeover bid, and which are considered individually
significant in terms of their impact on the business of the Group
as a whole.
The rules of certain of the Company’s incentive plans include
provisions which apply in the event of a takeover or reconstruction.
Related party transactions
Details of all related party transactions are set out in Note 36 to the
financial statements. Internal controls are in place to ensure that any
related party transactions involving Directors, or their connected
persons are carried out on an arm’s length basis and are disclosed in
the financial statements.
Political and charitable donations
During the year ended 31 December 2022, the Group made charitable
donations of €2.7 million (2021: €6.0 million), primarily to charities that
fund research into, and for the treatment of, problem gambling but also
to a variety of charities operating in countries in which the Company’s
subsidiaries are based. In addition, the Group continues to support
our employees in Ukraine by meeting the costs for assistance during
evacuation and monthly living assistance since then.
The Group made no political donations during this period (2021: €Nil).
Appointment of Directors
Sustainability and employees
Subject to the articles of association, the Company may, by ordinary
resolution, appoint a person who is willing to act to be a Director, either
to fill a vacancy, or as an addition to the existing Board, and may also
determine the rotation in which any Directors are to retire. Without
prejudice to the power of the Company to appoint any person to be a
Director pursuant to the articles of association, the Board shall have
power at any time to appoint any person who is willing to act as a
Director, either to fill a vacancy or as an addition to the existing Board,
but the total number of Directors shall not exceed any maximum
number fixed in accordance with the articles of association. Any
Director so appointed shall hold office only until the next Annual
General Meeting of the Company following such appointment and
shall then be eligible for re-election but shall not be taken into account
in determining the number of Directors who are to retire by rotation at
that meeting.
Retirement of Directors
At each Annual General Meeting one-third of the Directors (excluding
any Director who has been appointed by the Board since the previous
Annual General Meeting) or, if their number is not an integral multiple of
three, the number nearest to one-third but not exceeding one-third shall
retire from office (but so that if there are fewer than three Directors who
are subject to retirement by rotation under this article one shall retire).
Removal of Directors
The Company may by ordinary resolution passed at a meeting called
for such purpose, or by written resolution consented to by members
holding at least 75% of the voting rights in relation thereto, remove any
Director before the expiration of his period of office notwithstanding
anything in the articles of association or in any agreement between
the Company and such Director and, without prejudice to any claim
for damages which he may have for breach of any contract of service
between him and the Company, may (subject to the articles) by
Information with respect to the Group’s impact on the environment
and other matters concerning sustainability can be found on pages
46 to 77.
Employee engagement continues to be a top priority across the
Group and, in accordance with principle D of the Code, we are looking
at ways to increase engagement with our workforce and a further
update will be included in next year’s Annual Report. Various initiatives
involving our employees are set out in the Strategic Report on
pages 2 to 92 and in the statement dealing with our relationship with
stakeholders on pages 43 to 45.
Applications for employment by disabled persons are always fully
and fairly considered, bearing in mind the aptitude and ability of
the applicant concerned. The Group places considerable value
on the involvement of its employees and has continued to keep
them informed of matters affecting them as employees and on the
performance of the Group and has run information days for employees
in different locations across the Group during the year. Details of our
engagement with stakeholders are set out on pages 43 to 45. Some
employees are stakeholders in the Company through participation in
share option plans. Information provided by the Company pursuant to
the Disclosure Guidance and Transparency Rules is publicly available
via the regulatory information services and the Company’s website,
www.playtech.com.
Branches
The Company’s subsidiary Playtech Holdings Limited has established
a branch in Argentina. Playtech Software Limited (UK) has established
a branch in Gibraltar. Intelligent Gaming Systems Limited has
established a branch in Argentina. Quickspin AB has established a
branch in Malta. V.B. Video (Cyprus) Limited has established a branch
in Italy. VF 2011 Limited has established a branch in Gibraltar and
Playtech Software Bulgaria Limited has established a branch in Spain.
Playtech plc Annual Report and Financial Statements 2022
131
Governance Report Directors’ report continued
Regulatory disclosures
The information in the following tables is provided in compliance with the Listing Rules and the Disclosure Guidance and Transparency
Rules (DTRs).
The DTRs also require certain information to be included in a corporate governance statement in the Directors’ Report. Information that fulfils
the requirements of the corporate governance statement can be found in the Governance Report on page 142 and is incorporated into this
Directors’ Report by reference.
Disclosure table pursuant to Listing Rule 9.8.4C
Listing Rule
Information included
Disclosure
9.8.4(1)
9.8.4(2)
9.8.4(4)
9.8.4(5)
9.8.4(6)
9.8.4(7)
9.8.4(8)
9.8.4(9)
9.8.4(10)
9.8.4(11)
9.8.4(12)
9.8.4(12)
9.8.4(14)
Interest capitalised by the Group
Unaudited financial information
Long-term incentive scheme only involving a Director
Directors’ waivers of emoluments
Directors’ waivers of future emoluments
Non-pro-rata allotments for cash
Non-pro-rata allotments for cash by major subsidiaries
Listed company is a subsidiary of another
Contracts of significance
Contracts of significance involving a controlling shareholder
Waivers of dividends
Waivers of future dividends
Agreement with a controlling shareholder
None
None
None
None
None
None
None
N/A
None
None
None
None
None
Additional information provided pursuant to Listing Rule 9.8.6
Listing Rule
Information included
9.8.6(1)
9.8.6(2)
Interests of Directors (and their connected persons) in the
shares of the Company at the year end and not more than one
month prior to the date of the notice of AGM
Interests in Playtech shares disclosed under DTR5 at the
year end and not more than one month prior to the date of
the notice of AGM
Disclosure
See page 126
See page 130
9.8.6(3)
The going concern statement
See page 84
9.8.6(4)(a)
Amount of the authority to purchase own shares available
at the year end
30,635,669 ordinary shares which authority will expire at the
AGM and is proposed to be renewed
9.8.6(4)(b)
Off-market purchases of own shares during the year
9.8.6(4)(c)
Off-market purchases of own shares after the year end
9.8.6(4)(d)
Non-pro-rata sales of treasury shares during the year
None
None
None
9.8.6(5)
9.8.6(6)
9.8.6(7)
9.8.6(8)
9.8.6(9)
Compliance with the principles of the UK Corporate
Governance Code
Details of non-compliance with the UK Corporate
Governance Code
See the statement on pages 98 and 99
See the statement on pages 98 and 99
Re Directors proposed for re-election, the unexpired term
of their service contract and a statement about Directors
without a service contract
The CEO and CFO serve under service contracts described on
page 103. The Chairman and the Non-executive Directors serve
under letters of appointment described on page 104
TCFD Recommendations and Recommended Disclosures
See pages 67 to 73
Statement on board diversity
See pages 60 to 62 and page 94
9.8.6(10)
Numerical data on ethnic background
See Responsible Business and Sustainability Addendum to the
Annual Report 2022.
9.8.6(11)
Explanation of approach to collecting data for LR9.8.6 R
(9) and (10)
See Responsible Business and Sustainability Addendum to the
Annual Report 2022.
132 Playtech plc Annual Report and Financial Statements 2022
Governance Report Additional information under Rule 4.1 of the Disclosure and Transparency Rules
Requirement
How fulfilled
Publication of Annual Financial Report within four months
of the end of the financial year
This document is dated 23 March 2023, being a date
less than four months after the year end
DTR
4.1.3
4.1.5
4.1.6
4.1.7
Content of Annual Financial Report
Audited financial statements
Auditing of financial statements
4.1.8 & 4.1.9
Content of management report
4.1.11(1)
4.1.11(2)
4.1.11(3)
4.1.11(4)
4.1.11(5)
4.1.11(6)
4.1.12 & 13
4.1.14
Important events since the year end
Future development
Research and development
Purchase of own shares
Branch offices
Use of financial instruments
Responsibility statement
Reporting format
The audited financial statements are set out on pages
144 to 225
The information that fulfils the requirement for a
management report can be found in the Strategic Report
on pages 2 to 92
The Statement of Directors’ Responsibilities can be
found on page 134
The audited financial statements set out on pages
144 to 225 comprise consolidated accounts prepared
in accordance with IFRS and the accounts of the
Company
The financial statements have been audited by BDO LLP
on pages 136 to 143
The Strategic Report on pages 2 to 92 includes an
analysis, using financial key performance indicators,
of the development, performance and position of the
Company’s business and a review of the Company’s
business and on pages 85 to 90 a description of the
principal risks and uncertainties
The Strategic Report on pages 2 to 92 gives details of
important events since the year end. See Note 40 to the
audited financial statements on page 215
The Strategic Report on pages 2 to 92 gives an
indication of the likely future development of the
Company
The Strategic Report on pages 2 to 92 gives an indication
of ongoing research and development activities
See the statement on page 130
See the statement on page 131
See Note 5 to the audited financial statements on pages
152 to 162
See the statement of the Directors on page 134
Available on www.playtech.com
Playtech plc Annual Report and Financial Statements 2022
133
Governance Report Directors’ report continued
Statement of Directors’ Responsibilities
Directors’ responsibilities pursuant to DTR4
Each of the Directors, whose names and functions are listed within
the Governance section on pages 96 and 97, confirm that, to the best
of their knowledge:
• the Group financial statements, which have been prepared in
accordance with International Accounting Standards adopted by
the UK, give a true and fair view of the assets, liabilities, financial
position and profit of the Group; and
• the Annual Report includes a fair review of the development and
performance of the business and the financial position of the Group
and the Company, together with a description of the principal risks
and uncertainties that they face.
Annual General Meeting
The Annual General Meeting provides an opportunity for the Directors
to communicate personally the performance and future strategy to
non-institutional shareholders and for those shareholders to meet with
and question the Board. All results of proxy votes are read out, made
available for review at the meeting, recorded in the minutes of the
meeting and communicated to the market and via the Group website.
The Annual General Meeting for 2023 is scheduled for 24 May 2023.
The notice convening the Annual General Meeting for this year, and
an explanation of the items of non-routine business, are set out in the
circular that accompanies the Annual Report.
Auditor
So far as each Director is aware, at the date of the approval of the
financial statements there is no relevant audit information of which
the Company’s auditor is unaware. Each Director has taken all the
steps that they ought to have taken as a Director in order to make
themselves aware of any information needed by the Group’s auditor
for the purposes of its audit and to establish that the auditor is aware of
that information.
A resolution to reappoint BDO LLP as the Company’s auditor will
be submitted to the shareholders at this year’s AGM.
Approved by the Board and signed on behalf of the Board.
Chris McGinnis
Chief Financial Officer
23 March 2023
The Directors have elected to prepare the consolidated financial
statements for the Group in accordance with UK adopted International
Accounting Standards and have elected to prepare the Company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law).
The Directors are responsible under applicable law and regulation
for keeping proper accounting records which disclose with
reasonable accuracy at any time the financial position of the Group,
for safeguarding the assets and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
International Accounting Standard 1 (revised) requires that financial
statements present fairly for each financial year the Group’s financial
position, financial performance and cash flows. This requires the
faithful representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition criteria
for assets, liabilities, income and expenses set out in the International
Accounting Standards Board’s “Framework for the Preparation and
Presentation of Financial Statements”. In virtually all circumstances,
a fair presentation will be achieved by compliance with all applicable
International Financial Reporting Standards. A fair presentation also
requires the Directors to:
•
select suitable accounting policies and then apply them consistently;
• present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with
International Accounting Standards as adopted by the UK subject
to any material departures disclosed and explained in the financial
statements; and
• provide additional disclosures when compliance with the specific
requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on
the entity’s financial position and financial performance.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Group. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
In addition, the Directors at the date of this report consider that
the financial statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders
to assess the Group’s performance, business model and strategy.
Website publication
Financial statements are published on the Company’s website.
The maintenance and integrity of the Company’s website is
the responsibility of the Directors. The Directors’ responsibility
also extends to the ongoing integrity of the financial statements
contained therein.
134 Playtech plc Annual Report and Financial Statements 2022
Governance Report Financial
Statements
Financial Statements
136 Independent auditor’s report
144 Consolidated statement of comprehensive income
145 Consolidated statement of changes in equity
146 Consolidated balance sheet
148 Consolidated statement of cash flows
150 Notes to the financial statements
216 Company statement of changes in equity
217 Company balance sheet
218 Notes to the Company financial statements
226 Five-year summary
Company information
227 Company information
Playtech plc Annual Report and Financial Statements 2022
135
Financial Statements Independent auditor’s report
To the members of Playtech plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2022
and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; and
• the Parent Company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice.
We have audited the financial statements of Playtech plc (the "Parent Company") and its subsidiaries (the "Group") for the year ended
31 December 2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of
Changes in Equity, the Consolidated and Company Balance Sheets, the Consolidated of Cash Flows and notes to the financial statements
and notes to the Company financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted
international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure
Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the
additional report to the Audit Committee.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to
adopt the going concern basis of accounting for a period of at least 12 months from the date of approval of the financial statements included:
• Evaluating the Directors’ process in making its assessment, including the period covered, including confirming the assessment and underlying
projections were prepared by appropriate individuals with sufficient knowledge of the detailed figures as well as an understanding of the
Group’s markets, strategies and risks;
• Understanding and corroborating the achievability of key Director assumptions in their cash flow forecasts and challenging these against
our knowledge of the prior year, our knowledge of the business and industry, and other areas of the audit;
• Checking through enquiry with the Directors, review of Board minutes and review of external resources for any key future events that may
have been omitted from cash flow forecasts and assessing the impact these could have on future cash flows and cash reserves;
• Assessing the Directors’ stress test scenarios and challenging whether other reasonably possible scenarios could occur and including
in our assessment where appropriate;
• Assessing the Directors’ reverse stress test to analyse the level of reduction in EBITDA that could be sustained before a covenant breach
or liquidity event would be indicated;
• Confirming the financing facilities, repayment terms and financial covenants to supporting documentation;
• Reviewing the Directors’ assessment of covenant compliance throughout the forecast period to 30 June 2024;
• Considering the impact of inflation including energy costs and other macroeconomic matters;
• Ensuring any large non-routine payments are considered as part of the Directors’ assessment, this included matters such as the repayment
of the 2023 bond of €200 million;
• Challenging the Directors as to matters outside of the going concern assessment period, principally relating to the timing and cost of the
Italian license renewals; and
• Considering the adequacy of the disclosures relating to going concern included within the Annual Report against the requirements of the
accounting standards and consistency of the disclosure against the forecasts and going concern assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least 12
months from when the financial statements are authorised for issue.
136 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Conclusions relating to going concern continued
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Overview
Coverage
Key audit matters
100% (2021: 100%) of Group revenue.
96% (2021: 95%) of Group total assets.
Revenue recognition.
Accounting for and valuation of LATAM equity call options.
Valuation and disclosure of Caliplay (Mexico) and Wplay (Columbia) equity call options.
2022
2021
Our key audit matter over LATAM equity call options has been focused in the current year on the Caliplay and Wplay call
options, the prior year KAM included those held over other LATAM based entities which are immaterial in the current year.
Materiality
Group financial statements as a whole
€12.0 million (2021: €7.9 million) based on 3% (2021: 2.5%) of Adjusted EBITDA.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s systems of internal control,
and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
In determining the scope of our audit we considered the level of work to be performed at each component in order to ensure sufficient assurance
was gained to allow us to express an opinion on the financial statements of the Group as a whole. We tailored the extent of the work to be
performed at each component, either by us, as the Group audit team, or component auditors within the BDO network based on our assessment
of the risk of material misstatement at each component.
We performed full scope audit procedures on ten components, five of these were considered significant with the other five being undertaken
to ensure appropriate audit coverage. Four of the significant components were audited by the Group audit team and the remaining significant
component audited by BDO Italy. For the remaining non-significant components, component auditors within the BDO network or the Group
audit team performed review procedures or specific audit procedures on certain balances based on their relative size, risks in the business
and our knowledge of those entities.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether
sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a whole.
Our involvement with the component auditor of the significant component included attending key meetings as appropriate (including those
with local management), directing the scope and approach of the audit, and performing a detailed review of the audit files.
For the component auditors of the non-significant components we provided group instructions, directed the scope of their work and where
considered necessary, performed a detailed review of their working papers.
Playtech plc Annual Report and Financial Statements 2022
137
Financial Statements Independent auditor’s report continued
To the members of Playtech plc
An overview of the scope of our audit continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matter (KAM)
Revenue
recognition.
The Group’s
revenue streams
and the related
accounting
policies applied
during the period
are detailed
in Note 5 to
the financial
statements.
How the scope of our audit addressed the key audit matter
Revenue recognition was
considered a KAM due to the
complexity of the IT systems
and the significant level of audit
focus required.
We developed an understanding of the key revenue processes from inception to
recognition in the financial statements and assessed the design and implementation
of the controls over the Group’s revenue cycles. This included undertaking test bets
as part of our risk assessment procedures and tracing the underlying transactions to
source data.
Our key audit matters in respect
of revenue consists of the
following:
Playtech B2B gaming revenue
There is a risk over accuracy
and existence of revenue due
to the nature of the contracts
in place, complexity of the
IT systems and the risk of
manipulation or error in the
underlying source data.
Snaitech B2C streams:
There is a risk in respect of
accuracy and existence of
revenue due to the complexity
of the IT systems and
manipulation or error in the
underlying source data.
In completing this work we utilised our own IT specialists to assess the IT controls in
respect of the key operating systems supporting the above transaction flows. Our IT
specialists also reviewed the work completed by the IT specialists from the BDO Italy
component team.
Our testing approach for revenue was tailored for the different revenue streams and
entities across the Group.
B2B gaming revenue
We examined and assessed the treatment of a sample of new and modified revenue
contracts in the year to check the performance obligations were identified appropriately
and that revenue was recognised in line with the Group’s accounting policies and
relevant accounting standards.
We tested revenue recognised with the support of IT specialists, by completing the
following:
• Tested the operating effectiveness of certain controls within the Groups main
operating system (IMS);
• Performed a full reconciliation of IMS to the billing database (used by management
to calculate revenue for invoicing);
• For a sample of customers and invoices, we independently recalculated revenue
based on the underlying source data and the contractual terms in place and agreed
the invoices to cash receipt;
• Completed test bets and traced through underlying data to IMS; and
• For a sample of customers, analysed revenue for the year on a monthly basis
to identify exceptions and tested those identified to underlying source data.
B2C revenue
Our testing approach for B2C revenue recognised by Snaitech included the following:
• With the assistance of our IT specialists, we carried out an end-to-end walkthrough
to understand the IT system, process and controls in place for each of the revenue
streams (betting, amusement with prizes (AWP) and video lottery terminals (VLT));
• With the support of our IT specialists, we tested the operating effectiveness
of IT controls, including user access controls, change management and data
processing management;
• For betting, we performed a reconciliation of bets from the operating platform
to the government ADM reports;
• For a sample of bets placed through retail outlets we recalculated the revenue
recognised based on contractual terms in place, and agreed amounts to underlying
contracts and cash receipts;
•
In respect of online betting we reconciled player balance liability to the underlying
data and tested a sample of deposits and withdrawals to payment processor
statements; and
• For AWP and VLT machines, we agreed the revenue recognised to the operating
system and to cash for a sample of items, and recalculated.
Key observation
Based on the work performed we did not identify any evidence of manipulation or
errors in the data and consider that revenue has been appropriately recognised.
138 Playtech plc Annual Report and Financial Statements 2022
Financial Statements How the scope of our audit addressed the key audit matter
With the support of our valuation experts, we challenged the key
assumptions used in the discounted cash flow models – this included:
• Challenge of the cash flows used and where possible, comparison
to third party market data;
• Recalculated the discount rates and challenged as to whether
appropriate risk premiums have been applied;
• Assessed the sensitivity analysis performed to changes in key
assumptions (such as discount rate, EBITDA margin, exit multiples,
exit date and post exit restrictions on realising value of the shares)
and considered any additional sensitivities required based on the
audit team’s assessment of the key inputs and judgements;
• Confirmed to contractual terms the expected share holdings of
the Group on exercise of the options; and
• Checked the underlying models for mathematical accuracy.
In respect of the valuation of the options, management were supported
by a third-party expert. We assessed the objectivity, expertise and
qualifications of the expert.
In respect of the disagreement with Caliplay, we assessed the Group’s
judgement over the lapse of the option, with reference to third-party
advice received as well as our own review of the contractual terms.
An overview of the scope of our audit continued
Key audit matters continued
Key audit matter (KAM)
Valuation and
disclosure of
Caliplay (Mexico)
and Wplay
(Columbia) equity
call options
(with reference
to Note 5 –
accounting
policies and
judgements and
estimates Note 6
and Note 20).
This was considered a KAM due to the
level of audit team effort, the complexities,
judgements and estimates required in the
valuation as well as associated disclosures.
Mexico: Caliplay
The valuation requires management
judgement in terms of the inputs and the
methodology applied to calculate the fair
value of €524.0 million. (2021: €506.7 million).
The valuation method for the option has
changed when compared to prior year.
The potential transaction with a special
purpose acquisition company (SPAC) which
was deemed to have a high probability of
completion at 31 December 2021, fell away
in Q1 2022. The valuation methodology has
therefore changed from using the SPAC
transaction price to a discounted cash flow
(DCF) approach as at 31 December 2022.
The DCF approach introduces additional
risk due to the additional estimates and
judgements required.
As the Group announced publicly on 6
February 2023, it is seeking a declaration
from the English Courts to obtain clarification
of a point of disagreement with Caliplay. This
disagreement relates to whether Caliplay still
holds an option which permits it to redeem
the additional B2B services fee element of the
strategic agreement. Should it be declared
that Caliplay still has its redemption option and
Caliplay then exercises said option, this would
cancel the equity option held by the Group.
Playtech plc Annual Report and Financial Statements 2022
139
Financial Statements How the scope of our audit addressed the key audit matter
Disclosures
In respect of both options, we reviewed the disclosures to check that they
were complete and accurate based on the accounting approach and the
audit team’s assessment of the valuation work completed, this included
an assessment of the adequacy of the detail included in the critical
judgements and estimates section (see Note 6).
Key observation
Based on the work performed we consider the judgements and estimates
made in the valuation of the Caliplay and Wplay equity options and the
related disclosure to be appropriate.
Independent auditor’s report continued
To the members of Playtech plc
An overview of the scope of our audit continued
Key audit matters continued
Key audit matter (KAM)
Valuation and
disclosure of
Caliplay (Mexico)
and Wplay
(Columbia) equity
call options
(with reference
to Note 5 –
accounting
policies and
judgements and
estimates Note 6
and Note 20)
continued.
The redemption option is stated as being
exercisable for a period of 45 days following
the approval of the audited accounts of
Caliplay for the year ended 31 December
2021. The Group believes the option has
expired and whilst Caliplay has not sought to
exercise the option to date, Caliplay has made
it clear that it considers the option has not
yet expired.
In arriving at the fair value of the equity call
option derivative, the Group has made a
judgement that the option has expired.
Should the English Courts determine that the
option is exercisable and Caliplay chooses
to exercise, the amount payable by Caliplay
to Playtech upon exercise would either be
agreed between the parties or, failing which,
determined by an independent investment
bank valuing Playtech’s current entitlement to
receive the additional B2B services fee until
31 December 2034.
There is a risk therefore that should the option
be exercisable that it may materially impact
the fair value of the equity call option held by
the Company.
Colombia: Wplay
The Group hold an equity call option in
respect of Wplay which is required to be
fair valued.
Management have calculated the fair value of
the option as €93.5 million (2021: €97.2 million)
using a discounted cash flow model which
requires estimates and judgement.
Due to the estimates and judgements required
and the complexity of the option arrangement
there is a risk that the fair value of the option
is not appropriate and the valuation is
materially misstated.
In respect of both valuations the Company
engaged a third-party expert to support
them in the calculations.
Disclosures
In respect of all options held there is a risk
that the disclosures, sensitivities given and
disclosure of key judgements (including the
exercisability of the Caliplay option) and
estimates are not complete and accurate.
140 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements
Parent Company financial statements
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
2022
€’m
12.0
2021
€’m
7.9
2022
€’m
6.0
2021
€’m
4.5
3% of Adjusted EBITDA
2.5% of Adjusted EBITDA
50% of group materiality
55% of group materiality
Given the potential corporate
transaction activity,
Adjusted EBITDA (which
was the underlying basis
for the Aristocrat offer) was
considered to be the metric
of greatest interest to users of
the financial statements.
2% of total assets
capped at 50% of Group
materiality. This was
calculated as a percentage
of Group materiality for
Group reporting purposes
given the assessment of
aggregation risk.
2% of total assets capped
at 55% of Group materiality.
This was calculated as
a percentage of Group
materiality for Group
reporting purposes
given the assessment of
aggregation risk.
Although the previous offer
to acquire the company
has expired, Adjusted
EBITDA was the underlying
benchmark used in
determining the offer
price and is a key metric
used by analysts and the
Directors in assessing
the performance of
the business and in
banking covenants.
Performance materiality
Basis for determining
performance materiality
7.8
5.5
3.9
3.2
65% of Group materiality
– this was set by the audit
team with reference to
the level of adjustments
identified in the prior year,
level of sampling work
required and the number
of components.
70% of Group materiality –
this was set by the audit team
with reference to the level of
adjustments identified in the
prior year, level of sampling
work required and the
number of components.
65% of Parent Company
materiality – this was
set by the audit team
with reference to the
level of adjustments
identified in the prior year,
level of sampling work
required and the number
of components.
70% of Parent Company
materiality – this was set by
the audit team with reference
to the level of adjustments
identified in the prior year,
level of sampling work
required and the number
of components.
Component materiality
We set materiality for each component of the Group based on a percentage of between 25% and 60% (2021: 9% and 63%) of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged
from €3 million to €7 million (2021: €0.8 million to €5.0 million). In the audit of each component, we further applied performance materiality
levels of 65% (2021: 70%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of €240k (2021: €136k). We also
agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Playtech plc Annual Report and Financial Statements 2022
141
Financial Statements Independent auditor’s report continued
To the members of Playtech plc
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report other
than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is
to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Directors’ Remuneration Report
The Parent Company voluntarily prepares a Directors’ Remuneration Report in accordance with the provisions of the UK Companies Act 2006.
The Directors have requested that we audit the part of the Directors’ Remuneration Report specified by the Companies Act 2006 to be audited
as if the Company were a UK registered listed company. In our opinion, the part of the Directors’ Remuneration Report to be audited has been
properly prepared in accordance with the UK Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Parent Company's compliance with the provisions of the UK Corporate Governance Code specified for
our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and
longer-term viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified set out on page 84; and
Other Code
provisions
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers
and why the period is appropriate set out on page 91.
• Directors’ statement on fair, balanced and understandable set out on page 134;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 91;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems set out on pages 85 to 90; and
• The section describing the work of the Audit Committee set out on pages 106 to 110.
Responsibilities of Directors
As explained more fully in the Directors’ Governance report, the Directors are responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent 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 Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
142 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Auditor’s responsibilities for the audit of the financial statements continued
Extent to which the audit was capable of detecting non-compliance with laws and regulations
We design procedures in line with our responsibilities, outlined above, to detect non-compliance with laws and regulations. The extent to which
our procedures are capable of detecting non-compliance are detailed below:
• We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates, through
discussion with management and the Audit Committee and our knowledge of the industry. We focused on significant laws and regulations
that could give rise to a material misstatement in the financial statements, including, but not limited to, the IoM Companies Act 2006, the UK
Listing Rules, certain gaming license requirements, IFRSs as it applies in the UK and tax legislation; and
• We considered compliance with these laws and regulations through discussions with management, in-house legal counsel, head of
compliance, Group tax director and as well as reviewing internal audit reports. Our procedures also included reviewing minutes from Board
meetings of those charges with governance to identify any instances of non-compliance with laws and regulations.
Extent to which the audit was capable of detecting irregularities, including fraud
We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur. In addressing
the risk of fraud including management override of controls and improper revenue recognition, we tested the appropriateness of journal
entries made throughout the year by applying specific criteria;
• We performed a detailed review of the Group’s year end adjusting entries and journals throughout the year, investigated any that appeared
unusual as to nature or amount; assessed whether the judgements made in accounting estimates were indicative of a potential bias and tested
the risk of manipulation of IT systems with regards revenue recognition (see key audit matter above); and
• We also communicated potential fraud risks to all engagement team members and component auditors, and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the
less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with section 80C of the Isle of Man Companies Act
2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Oliver Chinneck (Recognised Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
23 March 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Playtech plc Annual Report and Financial Statements 2022
143
Financial Statements Consolidated statement of comprehensive income
For the year ended 31 December 2022
Continuing operations
Revenue
Distribution costs before depreciation and amortisation
Administrative expenses before depreciation and amortisation
Impairment of financial assets
EBITDA
Depreciation and amortisation
Impairment of tangible and intangible assets
Finance income
Finance costs
Share of loss from associates
Unrealised fair value changes of equity investments
Unrealised fair value changes of derivative financial assets
Loss on disposal of subsidiary
Profit before taxation
Income tax (expense)/credit
Profit from continuing operations
Discontinued operation
Profit/(loss) from discontinued operation, net of tax
Profit for the year – total
Other comprehensive loss:
Items that are or may be classified subsequently to profit or loss:
Exchange loss arising on translation of foreign operations
Recycling of foreign exchange loss on disposal of foreign
discontinued operations
Items that will not be classified to profit or loss:
Gain/(loss) on remeasurement of employee termination indemnities
Other comprehensive income/(loss) for the year
Total comprehensive income for the year
Profit for the year attributable to the owners of the Company
Total comprehensive income attributable to the owners of
the Company
Earnings per share attributable to the ordinary equity holders
of the Company
Profit or loss – total
Basic (cents)
Diluted (cents)
Profit or loss from continuing operations
Basic (cents)
Diluted (cents)
Note
9
10
12
13A
13B
20A
20B
20C
20A
10
10, 14
10
8
15
15
15
15
2022
2021
Actual
€’m
Adjusted
€’m 1
Actual
€’m
Adjusted
€’m 1
1,601.8
(1,067.3)
(147.3)
(14.7)
1,601.8
(1,063.3)
(118.2)
(14.7)
372.5
(170.1)
(38.5)
11.6
(73.0)
(3.8)
(0.3)
6.0
(8.8)
95.6
(55.0)
40.6
47.0
87.6
405.6
(128.1)
—
11.6
(69.9)
(3.8)
—
—
—
215.4
(54.9)
160.5
41.2
201.7
(0.2)
(0.2)
23.2
0.9
23.9
111.5
87.6
111.5
29.2
28.1
13.5
13.0
23.2
0.9
23.9
225.6
201.7
225.6
67.2
64.7
53.5
51.5
1,205.4
(794.5)
(127.4)
(2.2)
281.3
(169.1)
(21.6)
1.1
(67.7)
(0.6)
(1.6)
583.2
—
605.0
81.7
686.7
(12.1)
674.6
(1.4)
—
(0.1)
(1.5)
673.1
674.6
673.1
226.3
216.2
230.3
220.1
1,205.4
(788.8)
(98.5)
(1.0)
317.1
(134.3)
—
1.1
(62.9)
(0.6)
—
—
—
120.4
7.2
127.6
(13.8)
113.8
(1.4)
—
(0.1)
(1.5)
112.3
113.8
112.3
38.2
36.5
42.8
40.9
1
Adjusted numbers relate to certain non-cash and one-off items, as well as material reorganisation and acquisition-related costs. The Board of Directors believes that the adjusted results more
closely represent the consistent trading performance of the business. A full reconciliation between the actual and adjusted results is provided in Note 10.
144 Playtech plc Annual Report and Financial Statements 2022
Financial Statements
Consolidated statement of changes in equity
For the year ended 31 December 2022
Additional
paid in
capital
€’m
Employee
termination
indemnities
€’m
Retained
earnings
€’m
Employee
Benefit
Trust
€’m
Put/call
options
reserve
€’m
Foreign
exchange
reserve
€’m
Total
attributable to
equity holders
of Company
€’m
Non-
controlling
interests
€’m
Total
equity
€’m
Balance at 1 January 2022
606.0
(0.5)
1,025.0
(23.2)
(3.7)
(22.7)
1,580.9
0.3
1,581.2
Total comprehensive income for the year
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with the owners of the Company
Contributions and distributions
Exercise of options
Employee stock option scheme
Total contributions and distributions
Changes in ownership interests
Acquisition of non-controlling interest without change
in control
Total changes in ownership interests
Total transactions with owners of the Company
—
—
—
—
—
—
—
—
—
—
0.9
0.9
—
—
—
—
—
—
87.6
—
87.6
(6.0)
8.3
2.3
(3.4)
(3.4)
(1.1)
—
—
—
6.0
—
6.0
—
—
6.0
Balance at 31 December 2022
606.0
0.4
1,111.5
(17.2)
—
—
—
—
—
—
3.7
3.7
3.7
—
—
23.0
23.0
87.6
23.9
111.5
—
—
—
—
—
—
—
8.3
8.3
0.3
0.3
8.6
—
—
—
—
—
—
(0.3)
(0.3)
(0.3)
87.6
23.9
111.5
—
8.3
8.3
—
—
8.3
0.3
1,701.0
— 1,701.0
Balance at 1 January 2021
592.1
(0.4)
343.7
(14.5)
(3.7)
(21.3)
895.9
0.3
896.2
Total comprehensive income for the year
Profit for the year
Other comprehensive loss for the year
Total comprehensive income for the year
Transactions with the owners of the Company
Contributions and distributions
Exercise of options
Employee stock option scheme
Transfer from treasury shares to Employee
Benefit Trust
Total contributions and distributions
Total transactions with owners of the Company
—
—
—
—
—
13.9
13.9
13.9
—
(0.1)
674.6
—
(0.1)
674.6
—
—
—
—
—
(13.9)
11.9
8.7
6.7
6.7
—
—
—
13.9
—
(22.6)
(8.7)
(8.7)
—
—
—
—
—
—
—
—
—
(1.4)
674.6
(1.5)
(1.4)
673.1
—
—
—
—
—
—
11.9
—
11.9
11.9
—
—
—
—
—
—
—
—
674.6
(1.5)
673.1
—
11.9
—
11.9
11.9
Balance at 31 December 2021
606.0
(0.5)
1,025.0
(23.2)
(3.7)
(22.7)
1,580.9
0.3
1,581.2
Playtech plc Annual Report and Financial Statements 2022
145
Financial Statements Note
17
18
19
20A
20B
20C
22
32
21
22
23
24
25
26
27
28
18
32
30
29
33
2022
€’m
341.4
71.6
980.9
36.6
9.2
636.4
1.1
112.5
109.6
2021
€’m
329.7
73.8
1,046.1
5.2
8.1
622.2
6.6
102.9
104.4
2,299.3
2,299.0
163.9
107.6
5.5
426.5
703.5
19.6
723.1
3,022.4
606.0
0.4
(17.2)
—
0.3
1,111.5
1,701.0
—
1,701.0
—
348.0
54.0
1.0
124.8
2.3
10.0
24.9
565.0
178.5
87.1
4.9
575.4
845.9
507.4
1,353.3
3,652.3
606.0
(0.5)
(23.2)
(3.7)
(22.7)
1,025.0
1,580.9
0.3
1,581.2
167.1
875.0
69.8
2.9
88.9
6.0
13.5
12.8
1,236.0
Consolidated balance sheet
As at 31 December 2022
ASSETS
Property, plant and equipment
Right of use assets
Intangible assets
Investments in associates
Other investments
Derivative financial assets
Trade receivables
Deferred tax asset
Other non-current assets
Non-current assets
Trade receivables
Other receivables
Inventories
Cash and cash equivalents
Assets classified as held for sale
Current assets
TOTAL ASSETS
EQUITY
Additional paid in capital
Employee termination indemnities
Employee Benefit Trust
Put/call options reserve
Foreign exchange reserve
Retained earnings
Equity attributable to equity holders of the Company
Non-controlling interests
TOTAL EQUITY
LIABILITIES
Loans and borrowings
Bonds
Lease liability
Deferred revenues
Deferred tax liability
Contingent consideration and redemption liability
Provisions for risks and charges
Other non-current liabilities
Non-current liabilities
146 Playtech plc Annual Report and Financial Statements 2022
Financial Statements
LIABILITIES continued
Bonds
Trade payables
Lease liability
Progressive operators’ jackpots and security deposits
Client funds
Income tax payable
Gaming and other taxes payable
Deferred revenues
Contingent consideration and redemption liability
Provisions for risks and charges
Other payables
Liabilities directly associated with assets classified as held for sale
Current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Note
28
31
18
24
24
34
30
29
33
25
2022
€’m
199.6
61.2
31.8
114.3
39.8
17.3
112.8
5.0
0.6
3.9
169.1
755.4
1.0
756.4
1,321.4
3,022.4
2021
€’m
—
41.3
20.3
110.7
30.4
2.6
105.4
5.2
5.0
3.2
166.2
490.3
344.8
835.1
2,071.1
3,652.3
The consolidated financial statements were approved by the Board and authorised for issue on 23 March 2023.
Mor Weizer
Chief Executive Officer
Chris McGinnis
Chief Financial Officer
Playtech plc Annual Report and Financial Statements 2022
147
Financial Statements
Consolidated statement of cash flows
For the year ended 31 December 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustment to reconcile net income to net cash provided by operating activities (see below)
Net taxes paid
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Loans granted
Acquisition of assets under business combinations
Acquisition of property, plant and equipment
Acquisition of intangible assets
Capitalised development costs
Acquisition of investment in associates
Proceeds from the sale of property, plant and equipment
Disposal of Financial segment/casual and social gaming, net of cash disposed
Disposal of subsidiary, net of cash disposed
Note
35
20A/B
25C/25B
20A
2022
€’m
87.6
337.1
(13.8)
410.9
(30.4)
(2.9)
(54.0)
(10.1)
(61.3)
(30.2)
0.8
(169.8)
(0.4)
2021
€’m
674.6
(419.0)
(30.6)
225.0
(16.7)
—
(49.6)
(7.2)
(57.4)
(8.1)
0.7
10.7
—
Net cash used in investing activities
(358.3)
(127.6)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid on bonds and loans and borrowings
Repayment of loans and borrowings
Repayment of bonds
Payment of contingent consideration and redemption liability (see below)
Principal paid on lease liability
Interest paid on lease liability
Net cash used in financing activities
DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
Exchange (loss)/gain on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT END OF YEAR
Cash and cash equivalents consists of:
Cash and cash equivalents – continuing operations
Cash and cash equivalents treated as held for sale
Less: expected credit loss on cash and cash equivalents
28
24
24
24
(36.7)
(166.1)
(330.0)
(5.9)
(22.5)
(5.7)
(566.9)
(514.3)
942.1
(0.9)
426.9
426.9
—
426.9
(0.4)
426.5
(39.4)
(150.0)
—
(0.7)
(22.7)
(5.6)
(218.4)
(121.0)
1,061.2
1.9
942.1
576.0
366.1
942.1
(0.6)
941.5
148 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Note
17
19
18
18
20A
17
19
25C
25C/25B
20A
20B
20C
ADJUSTMENT 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
Amortisation of intangible assets
Amortisation of right of use assets
Capitalisation of amortisation of right of use assets
Gain on early termination of lease contracts
Share of loss from associates
Impairment of other receivables
(Reversal of)/impairment of property, plant and equipment
Impairment of intangible assets
Reversal of impairment of asset classified as held for sale
Profit on disposal of financial segment/casual and social gaming
Loss on disposal of subsidiary
Changes in fair value of equity investments
Changes in fair value of derivative financial assets
Fair value loss on convertible loans
Interest on bonds and loans and borrowings
Interest on lease liability
Interest income on loans receivable
Income tax expense/(credit)
Changes in equity-settled share-based payments
Movement in contingent consideration and redemption liability
Expected credit loss on cash and cash equivalents
Expected credit loss on loans receivable
Unrealised exchange (gain)/loss
Other
Changes in operating assets and liabilities:
Change in trade receivables
Change in other receivables
Change in inventories
Change in trade payables
Change in progressive operators, jackpots and security deposits
Change in client funds
Change in other payables
Change in provisions for risks and charges
Change in deferred revenues
Payment of contingent consideration and redemption liabilities on previous acquisitions
A. Acquisition of Eyecon Limited
B. Acquisition of non-controlling interest of Statscore SP Z.O.O.
C. Other acquisitions
2022
€’m
2021
€’m
41.5
109.8
21.5
(1.9)
(0.7)
3.8
—
(0.2)
38.7
—
(15.1)
8.8
0.3
(6.0)
3.0
36.2
5.7
(1.3)
58.5
8.3
(4.3)
(0.2)
1.6
(4.4)
0.2
13.0
3.5
(0.6)
20.4
3.6
(15.3)
13.6
(2.8)
(2.1)
337.1
2022
€’m
3.6
1.6
0.7
5.9
42.9
109.3
20.2
(2.1)
(1.2)
0.6
1.2
12.5
9.1
(2.0)
(7.6)
—
1.6
(583.2)
—
41.2
5.6
(0.5)
(79.8)
13.8
6.2
—
—
8.7
0.4
(5.9)
(28.0)
(0.2)
(7.9)
10.5
21.7
1.8
(4.2)
(3.7)
(419.0)
2021
€’m
—
—
0.7
0.7
Playtech plc Annual Report and Financial Statements 2022
149
Financial Statements Notes to the financial statements
Note 1 – General
Playtech plc (the “Company”) is an Isle of Man company. The registered office is located at St George’s Court, Upper Church Street, Douglas,
Isle of Man IM1 1EE.
These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the “Group”).
Note 2 – Basis of preparation
These consolidated financial statements have been prepared in accordance with the UK adopted International Accounting Standards (IAS).
They were authorised for issue by the Company’s Board of Directors on 23 March 2023.
Details of the Group’s accounting policies are included in Note 5.
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 30 June 2024 which aligns with the six-monthly covenant measurement period.
Cash and cash equivalents
Cash held on behalf of clients, progressive jackpots and security deposits
Adjusted gross cash and cash equivalents (excluding assets and liabilities held for sale)
31 December
2022
€’m
31 December
2021
€’m
426.5
(154.1)
272.4
575.4
(141.1)
434.3
Despite the decline in adjusted gross cash and cash equivalents from €434.3 million at 31 December 2021 to €272.4 million at 31 December
2022, the Group continues to hold a strong liquidity position. The decline from the prior year is explained by the full repayment of the revolving
credit facility (RCF) drawn amounting to €166.1 million, as well as the €330.0 million partial repayment of the 2018 Bond, both offset by the cash
proceeds from disposal of the Financial segment of €223.9 million (refer to Note 25), as well as the Group’s strong performance during the year.
The Directors have reviewed liquidity and covenant forecasts for the Group, which assume that there will be no further lockdowns on a global
scale. The Directors have also considered sensitivities in respect of potential downside scenarios, reverse stress tests and the mitigating actions
available to management.
The modelling of downside scenarios assessed if there was a significant risk to the Group’s liquidity and covenant compliance position.
This includes risks such as not realising budget/forecasts across certain markets and any potential implications of changes in tax and other
regulations, as well as the impact on cash flow should the share buyback scheme and other shareholder return options resume.
The Group’s principal financing arrangements include an RCF up to €277.0 million, the 2018 Bond amounting to €200.0 million post partial
repayment and the 2019 Bond amounting to €350.0 million which are repayable in October 2023 and March 2026 respectively. The RCF has
been restructured during the year reducing the credit line from €317.0 million to €277.0 million and is available until October 2025, with the Group
having the option to extend by 12 months. The remaining €200.0 million balance of the 2018 Bond will be due upon expiration in October 2023, with
the current plan assuming this will be paid through cash reserves, rather than refinanced.
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 27 and 28.
As at 31 December 2022, 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 31 December 2022 (12 months ended 31 December 2021: 3:1).
•
Interest cover: Adjusted EBITDA/Interest to be over 4:1 for the 12 months ended 31 December 2022 (12 months ended 31 December 2021: 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.
If the Group’s results are in line with its base case projections as approved by the Board it would not be in breach of the financial covenants for a period
of no less than 15 months from approval of these financial statements (the “relevant going concern period”). This period covers the bank reporting
requirements for June 2023, December 2023 and June 2024 and is the main reason why the Directors selected a 15-month period of assessment.
Stress test
The stress test assumes a worst-case scenario for the entire Group which includes additional sensitivities around Italy, the Americas and Asia,
but with mitigations similar to the ones taken in 2020 and 2021 (including salary and capital expenditure reductions). It also considers the impact
of cash flow should the share buyback scheme commence again, as well as other shareholder return options. Under this scenario Adjusted
EBITDA would fall on average by 7% per month compared to the base case over the relevant going concern period, but the Group would not
breach its covenants.
Reverse stress test
The reverse stress test was used to identify the reduction in Adjusted EBITDA required that could result in either a liquidity event or breach of the
RCF and bond covenants.
As a result of completing this assessment, without considering further mitigating actions, management considered the likelihood of the reverse
stress test scenario arising to be remote. In reaching this conclusion management considered the following:
150 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Note 2 – Basis of preparation continued
Going concern basis continued
Reverse stress test continued
• current trading is performing above the base case;
• Adjusted EBITDA would have to fall by 87% in the year ending 31 December 2023 and 88% in the 12 months to June 2024 compared to the
base case, to cause a breach of covenants; and
•
in the event that revenues decline to this point to drive the decrease in Adjusted EBITDA, additional mitigating actions are available to management
which have not been factored into the reverse stress test scenario.
As such, the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operational existence
over the relevant going concern period and have therefore considered it appropriate to adopt the going concern basis of preparation in the
financial statements.
Note 3 – Functional and presentation currency
These consolidated financial statements are presented in Euro, which is the Company’s functional currency. The functional currency
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
New standards, interpretations and amendments adopted from 1 January 2022
The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2022,
but do not have a material impact on the consolidated financial statements of the Group.
New standards, interpretations and amendments not yet effective
There a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future
accounting periods that the Group has decided not to adopt early.
The amendments are applied retrospectively for annual periods on or after 1 January 2023:
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Disclosure of Accounting Policies.
The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances
of the term “significant accounting policies” with “material accounting policy information”. Accounting policy information is material if, when
considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that
the primary users of general purpose financial statements make on the basis of those financial statements.
The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other
events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related
transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material
transactions, other events or conditions is itself material.
The amendments to IAS 1 are effective for annual periods beginning on or after 1 January 2023, with earlier application permitted, and are
applied prospectively. The amendments to IFRS Practice Statement 2 do not contain an effective date or transition requirements.
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates.
The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition,
accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”.
The definition of a change in accounting estimates was deleted. However, the Board retained the concept of changes in accounting estimates in
the standard with the following clarifications:
• A change in accounting estimate that results from new information or new developments is not the correction of an error.
• The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates
if they do not result from the correction of prior period errors.
The amendments are effective for annual periods beginning on or after 1 January 2023 to changes in accounting policies and changes in
accounting estimates that occur on or after the beginning of that period, with earlier application permitted.
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.
The following amendments are effective for the period beginning 1 January 2024:
• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of
Liabilities as Current or Non-current – deferral of effective date.
The amendments affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount of
timing of recognition of any asset, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or non-current is based on the rights that are in existence at the end of the
reporting period, specify that the classification is unaffected by expectations about whether an entity will exercise its right to defer settlement
of a liability, explain the rights that are in existence if covenants are complied with at the end of the reporting period, and introduce a definition
of “settlement” to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
Playtech plc Annual Report and Financial Statements 2022
151
Financial Statements Note 5 – Significant accounting policies
The Group has consistently applied the following accounting policies to all periods presented in the consolidated financial statements, except if
mentioned otherwise.
A. Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition
of a business and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group
assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired
set has the ability to produce outputs.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill
arising is tested semi-annually for impairment. Any gain on a bargain purchase is recognised in the profit or loss immediately. Transaction costs
are expensed as incurred, except if related to the issue of debt or equity securities.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise,
other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent
consideration are recognised in the profit or loss. A contingent consideration in which the contingent payments are forfeited if employment is
terminated is compensation for the post-combination services and is not included in the calculation of the consideration and recognised as
employee-related costs.
Cash payments arising from settlement of contingent consideration and redemption liability are disclosed in financing activities in the
consolidated statement of cash flows.
When a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to its acquisition-
date fair value and the resulting gain or loss, if any, is recognised in the profit or loss. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other comprehensive income are reclassified to the profit or loss, where such treatment
would be appropriate if that interest were disposed of.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. Control is achieved when the Group:
• has the power over the entity;
•
is exposed, or has rights, to variable return from its involvement with the entity; and
• has the ability to use its power over the entity to affect its returns.
The Group reassesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three
elements of control listed above.
When the Group has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights
are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and
circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
• the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
• potential voting rights held by the Company, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities
at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
Where the Group holds a currently exercisable call option, the rights arising as a result of the exercise of the call option are included in the
assessment above of whether the Group has control.
The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences
until the date on which control ceases.
(iii) Non-controlling interests (NCI)
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.
Changes in the Group’s interest in a subsidiary that do not result in a change of control are accounted for as equity transactions. The difference
between the consideration and the carrying value of the NCI is recognised as profit/loss in the retained earnings.
(iv) Loss of control
When the Group loses control over a subsidiary it derecognises the assets and liabilities of the subsidiary and any related NCI and other
components of equity. Any resulting gain or loss is recognised in the profit or loss.
(v) Investments in associates and equity call options
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries.
In the consolidated financial statements, the Group’s investments in associates are accounted for using the equity method of accounting.
152 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 5 – Significant accounting policies continued
A. Basis of consolidation continued
(v) Investments in associates and equity call options continued
Under the equity method, the investment in an associate or a joint venture is carried in the consolidated balance sheet at cost plus post-acquisition
changes in the Group’s share of the net assets of the associate. The Group’s share of the results of the associate is included in the profit or loss.
Losses of the associate or joint venture in excess of the Group’s cost of the investment are recognised as a liability only when the Group has
incurred obligations on behalf of the associate.
On acquisition of the investment, any difference between the cost of the investment and share of the associate’s identifiable assets and liabilities
is accounted for as follows:
• Any premium paid is capitalised and included in the carrying amount of the associate.
• Any excess of the share of the net fair value of the associate’s identifiable assets and liabilities over the cost of the investment is included as
income in the determination of the share of the associate’s profit or loss in the period in which the investment is acquired.
Any intangibles identified and included as part of the investment are amortised over their assumed useful economic life. Where there is objective
evidence that the investment in an associate may be impaired the carrying amount of the investment is tested for impairment in the same way as
other non-financial assets.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the profit or loss outside operating profit and
represents profit or loss before tax. The associated tax charge is disclosed in income tax.
The Group recognises its share of any changes in the equity of the associate through the consolidated statement of changes in equity. Profits
and losses resulting from transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate.
The Group applies equity accounting only up to the date an investment in associate meets the criteria for classification as held for sale. From
then onwards, the investment is measured at the lower of its carrying amount and fair value less costs to sell.
When potential voting rights or other derivatives containing potential voting rights exist, the Group’s interest in an associate is determined solely
on the basis of existing ownership interests and does not reflect the possible exercise or conversion of potential voting rights and other derivative
instruments unless there is an existing ownership interest as a result of a transaction that currently gives it access to the returns associated with
an ownership interest. In such circumstances, the proportion allocated to the entity is determined by taking into account the eventual exercise
of those potential voting rights and other derivative instruments that currently give the entity access to the returns. When instruments containing
potential voting rights in substance currently give access to the returns associated with an ownership interest in an associate or a joint venture,
the instruments are not subject to IFRS 9 and equity accounting is applied. In all other cases, instruments containing potential voting rights in an
associate or a joint venture are accounted for in accordance with IFRS 9.
A derivative financial asset is measured under fair value under IFRS 9. In the case where there is significant influence, but the option is not
currently exercisable, there is still an investment in associate but as there is no current access to profits the option is fair valued instead.
Derivatives are recorded at fair value and classified as assets when their fair value is positive and as liabilities when their fair value is negative.
Subsequently, derivatives are measured at fair value.
(vi) Equity investments held at fair value
All equity investments in scope of IFRS 9 are measured at fair value in the balance sheet. Fair value changes are recognised in the profit or loss.
Fair value is based on quoted market prices (Level 1). Where this is not possible, fair value is assessed based on alternative methods (Level 3).
(vii) Transactions eliminated on consolidation
Intra-group balances and transactions are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated
against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
B. Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the
dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date.
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate
when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange
rate at the date of the transaction. Foreign currency differences are generally recognised in the profit or loss and presented within finance costs.
(ii) Foreign operations
On consolidation, the assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are
translated into Euro at the exchange rates at the reporting date and their statements of profit or loss are translated into Euro at the end of each
month at the average exchange rate for the month which approximates the exchange rates at the date of the transactions.
The exchange differences arising on the translation for consolidation are recognised in other comprehensive income (OCI) and accumulated in
the foreign exchange reserve.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative
amount in the foreign exchange reserve relating to the foreign operation is reclassified to the profit or loss as part of the gain or loss on disposal.
Playtech plc Annual Report and Financial Statements 2022
153
Financial Statements Note 5 – Significant accounting policies continued
C. Discontinued operation
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
• represents a separate major line of business or geographical area of operations;
•
•
is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as
held for sale.
When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is re-presented as if
the operation had been discontinued from the start of the comparative year.
D. Revenue recognition
The majority of the Group’s revenue is derived from selling services with revenue recognised when services have been delivered to the
customer. Revenue comprises the fair value of the consideration received or receivable for the supply of services in the ordinary course of
the Group’s activities. Revenue is recognised when economic benefits are expected to flow to the Group. Specific criteria and performance
obligations are described below for each of the Group’s material revenue streams.
Type of income
Nature, timing of satisfaction of performance obligations and significant payment terms
B2B licensee fee
Licensee fee is the standard operator income of the Group which relates to licensed technology and the provision of
certain services provided via various distribution channels (online, mobile or land-based interfaces).
B2B fixed-fee income
Licensee fee is based on the underlying gaming revenue earned by our licensees calculated using the contractual terms
in place. Revenue is recognised when performance obligation is met which is when the gaming transaction occurs.
The payment terms of the B2B licensee fee is on average 30 days from the invoice date.
Fixed-fee income is the standard operator income of the Group which includes revenue derived from the provision
of certain services and licensed technology for which charges are based on a fixed fee and/or stepped according to
the monthly usage of the service/technology. The usage measurement is typically reset on a monthly basis.
The performance obligation is met and revenue is recognised once the obligations under the contracts have been met
which is when the services have been provided.
Services provided and fees for:
a.
b.
minimum revenue guarantee: the additional balance billed by the Group on a monthly basis for the difference in the
minimum guarantee per licensee contract and actual performance; and
other: hosting, live, set-up, content delivery network and maintenance fees. The fees charge to licensees for these
services are fixed per month.
The amounts for the above are recognised over the life of the contracts and are typically charged on a fixed percentage
and stepped according to the monthly usage of the service depending on the type of service. Set-up fees are recognised
over the whole period of the contract, with an average period of 36 months. The revenue is recognised monthly over the
period of the contract and the payment terms of the B2B fixed fee income is on average 30 days from the invoice date.
B2B cost-based revenue
Cost-based revenue is the standard operator income of the Group which is made of the total revenue charged to the
licensee based on the development costs needed to satisfy the contract with the licensee.
The largest type of service included in cost-based revenue is the dedicated team costs. Dedicated team employees are
charged back to the client based on time spent on each product.
Cost-based revenues are recognised on a monthly basis based on the contract in place of licensee with Playtech and any
additional services needed on development are charged to the licensee upon delivery of the service. The payment terms
of the B2B cost-based revenue is on average 30 days from the invoice date.
B2B revenue received from
the sale of hardware
Revenue received from the sale of hardware is the total revenue charged to customers upon the sale of each hardware
product. The performance obligation is met and revenue is recognised on delivery of the hardware and acceptance
by the customer.
Revenue received from future sale of hardware is recognised as deferred revenue. Once the obligation for the future
sale is met, revenue is then recognised in profit or loss. The payment terms of the B2B revenue received from the sale
of hardware is on average 30 days from the invoice date.
Additional B2B services fee This income is calculated based on the profit and/or net revenues generated by the customer in return for the additional
services provided to them by the Group. This is typically charged on a monthly basis and is measured using a predetermined
percentage set in each licensee arrangement. The revenue is only recognised when the customer’s activities go live and
the revenue from the additional B2B services is recognised only once the Group is unconditionally contractually entitled
to it. The Directors have determined that this is when the customer starts generating profits which is later than when the
customer goes live with its B2C operations. The Directors' rationale is that there is uncertainty that the Group will collect the
consideration to which it is entitled before the customer starts generating profits and therefore, the revenue is wholly variable.
The payment terms of the additional B2B services fees is on average 30 days from the invoice date.
154 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 5 – Significant accounting policies continued
D. Revenue recognition continued
Type of income
B2C revenue
Nature, timing of satisfaction of performance obligations and significant payment terms
In respect of B2C Snaitech revenues, the Group acts as principal with the end customer, with specific revenue policies
as follows:
• The revenues from land-based gaming machines are recognised net of the winnings, jackpots and certain flat-rate
gaming tax.
• The revenue from online gaming (games of skill/casino/bingo) are recognised net of the winnings, jackpots, bonuses
and certain flat-rate gaming tax. In respect of Casino and Bingo, revenue is recognised at the conclusion of the bet.
Revenue from games of skill is recognised at the conclusion of the bet.
• The revenues related to the acceptance of fixed odds bets are considered financial instruments under IFRS 9 and
are recognised net of certain flat-rate gaming tax, winnings, bonuses and the fair value of open bets.
• Revenues related to fixed odds bets are recognised at the conclusion of the event.
• Poker revenues in the form of commission (i.e. rake) is recognised at the conclusion of each poker hand.
The performance obligation is the provision of the poker games to the players.
• All the revenues from gaming machines are recorded net of players’ winnings and certain gaming taxes while the
concession fees payable to the regulator and the compensation of operators, franchisees and platform providers are
accounted as expenses. Revenue is recognised at the time of the bet.
Where the gaming tax incurred is directly measured by reference to the individual customer transaction and related to
the stake (described as “flat-rate tax” above), this is deducted from revenue.
Where the tax incurred is measured by reference to the Group’s net result from betting and gaming activity, this is not
deducted from revenue and is recognised as an expense.
In respect of Sun Bingo and B2C Sport revenue, the Group acts as principal with the end customer, with revenue being
recognised at the conclusion of the event, net of winnings, jackpots and bonuses.
Financial trading income
(discontinued operations)
Financial trading income represents gains (including commission) and losses arising on client trading activity, primarily
in contracts for difference on shares, indexes, commodities and foreign exchange.
Open client positions are carried at fair market value and gains and losses arising on this valuation are recognised in
revenue as well as gains and losses realised on positions that have closed.
The performance obligation is met in the accounting periods in which the trading transaction occurs and is concluded.
Based on the services provided by the Group, excluding certain rebates provided to customers in the Financial division, no return, refund and
other similar obligations exist. Moreover, no warranties and related obligations exist.
E. Share-based payments
Certain employees participate in the Group’s share option plans. Following the 2012 LTIP employees are granted cash-settled options and
equity-settled options. The Remuneration Committee has the option to determine if the option will be settled in cash or equity, a decision
that is made at grant date. The fair value of the equity-settled options granted is charged to the profit or loss on a straight-line basis over the
vesting period and the credit is taken to equity, based on the Group’s estimate of shares that will eventually vest. Fair value is determined
by the Black-Scholes, Monte Carlo or binomial valuation model, as appropriate. The cash-settled options are presented as a liability. The
liability is remeasured at each reporting date and settlement date so that the ultimate liability equals the cash payment on settlement date.
Remeasurements of the fair value of the liability are recognised in profit or loss.
The Group has also granted awards to be distributed from the Group’s Employee Benefit Trust. The fair value of these awards is based on
the market price at the date of the grant; some of the grants have performance conditions. The performance conditions are for the Executive
Management and include targets based on growth in earnings per share and total shareholder return over a specific period compared to other
competitors. The fair value of the awards with market performance conditions is factored into the overall fair value and determined using a
Monte Carlo method. Where these options lapse due to not meeting market performance conditions the share option charge is not reversed.
F. Income tax
The income tax expense represents the sum of the tax currently payable and deferred tax.
(i) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss because
it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of
the reporting period.
A provision is recognised for those matters for which the tax determination is uncertain, but it is considered probable that there will be a
future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.
The assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of
such activities and in certain cases based on specialist tax advice.
Playtech plc Annual Report and Financial Statements 2022
155
Financial Statements Note 5 – Significant accounting policies continued
F. Income tax continued
(ii) Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
•
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the
timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses.
Deferred tax assets are recognised in the period in which the deductible temporary differences arise when there are sufficient taxable temporary
differences relating to the same taxation authority and the same taxable entity which are expected to reverse, or where it is probable that taxable
profit will be available against which a deductible temporary difference can be utilised.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; and
•
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred
tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable
profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are
reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when 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 reporting date.
Deferred tax relating to items recognised outside the profit or loss is recognised outside the profit or loss. Deferred tax items are recognised
in correlation to the underlying transaction either in OCI or directly in equity.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised
subsequently, if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long
as it does not exceed goodwill) if it was recognised during the measurement period or is otherwise recognised in profit or loss.
The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered.
The tax base of assets and liabilities is assessed at each reporting date, and changes in the tax base that result from internal reorganisations,
changes in the expected manner of recovery or changes in tax law are reflected in the calculation of deductible and taxable temporary differences.
G. Finance expense
Finance expense arising on interest-bearing financial instruments carried at amortised cost are recognised in the profit or loss using the effective
interest rate method. Finance expense includes the amortisation of fees that are an integral part of the effective finance cost of a financial
instrument, including issue costs, and the amortisation of any other differences between the amount initially recognised and the redemption price.
All finance expenses are recognised over the availability period.
Interest expense arising on the above during the period is disclosed under the financing activities in the consolidated statement of cash flows.
H. Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase,
costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
156 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 5 – Significant accounting policies continued
I. Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items
(major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.
(iii) Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-
line method over their estimated useful lives, and is generally recognised in profit or loss. Land is not depreciated.
The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:
Computers and gaming machines
Office furniture and equipment
Freehold and leasehold buildings and improvements
%
20–33
7–33
3–20, or over the length of the lease
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
J. Intangible assets and goodwill
(i) Recognition and measurement
Goodwill
Goodwill represents the excess of the cost of a business combination over the Group’s interest in the fair value of identifiable assets, liabilities
and contingent liabilities acquired. Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the
amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity
interest in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration
classified as a financial liability, remeasured subsequently through profit or loss. Direct costs of acquisition are recognised immediately as an
expense. Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the profit or loss. Where the fair
value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the profit
or loss on the acquisition date as a gain on bargain purchase.
Externally acquired intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any
accumulated impairment losses.
Business combinations
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal
rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.
Internally generated intangible assets (development costs)
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group
are recognised as intangible assets where the following criteria are met:
•
it is technically feasible to complete the software so that it will be available for use;
• management intends to complete the software and use or sell it;
• there is an ability to use or sell the software;
•
it can be demonstrated how the software will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software are available; and
• the expenditure attributable to the software during its development can be reliably measured.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the
intangible asset first meets the recognition criteria listed above. Expenditure includes salaries, wages and other employee-related costs
directly engaged in generating the assets and any other expenditure that is directly attributable to generating the assets (i.e. certifications
and amortisation of right of use assets). Where no internally generated intangible asset can be recognised, development expenditure is
recognised in profit or loss in the period in which it is incurred.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the profit or loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over
their estimated useful lives and is generally recognised in the profit or loss. Goodwill is not amortised.
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Financial Statements Note 5 – Significant accounting policies continued
J. Intangible assets and goodwill continued
(iii) Amortisation continued
The estimated useful lives for current and comparative periods are as follows:
Domain names
Internally generated capitalised development costs
Technology IP
Customer lists
Affiliate contracts
Patents and licences
%
Nil
20–33
13–33
In line with projected cash flows or 7–20
5–12.5
10–33 or over the period of the licence
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
K. Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it is highly probable that they will be
recovered primarily through sale rather than through continuing use.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for
immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale
will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to
be completed within one year from the date of the classification.
Such assets, or disposal groups, are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a
disposal group is allocated first to goodwill, and then to the remaining assets on a pro rata basis, except that no loss is allocated to inventories,
financial assets or deferred tax assets, which continue to be measured in accordance with the Group’s other accounting policies. Impairment
losses on initial classification as held for sale or held for distribution and subsequent gains and losses on remeasurement are recognised in the
profit or loss.
Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.
L. Financial instruments
Initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive
income and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s
business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which
the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which
the Group has applied the practical expedient are measured at the transaction price. In order for a financial asset to be classified and measured
at amortised cost or fair value through OCI, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the
principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash
flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
•
•
•
financial assets at amortised cost (debt instruments);
financial assets at fair value through other comprehensive income with recycling of cumulative gains and losses (debt instruments);
financial assets designated at fair value through other comprehensive income with no recycling of cumulative gains and losses upon
derecognition (equity instruments); and
•
financial assets at fair value through profit or loss.
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains
and losses are recognised in the profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised
cost include trade receivables, loans receivable and cash and cash equivalents.
Cash and cash equivalents consist of cash at bank and in hand, short-term deposits with an original maturity of less than three months and
customer balances.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the
profit or loss. This category includes listed equity investments which the Group had not irrevocably elected to classify at fair value through OCI.
158 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 5 – Significant accounting policies continued
L. Financial instruments continued
(i) Financial assets continued
Financial assets at fair value through profit or loss continued
The Group recognises a debt financial instrument with an embedded conversion option, such as a loan convertible into ordinary shares of an
entity, as a financial asset in the balance sheet. On initial recognition, the convertible loan is measured at fair value with any gain or loss arising on
subsequent measurement until conversion recognised in profit or loss. On conversion of a convertible instrument, the Group derecognises the
financial asset component and recognises it as an investment (equity interest, associate, joint venture or subsidiary) depending on the results of
the assessment performed under the relevant standards.
At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and
supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses the internal credit
rating of the debt instrument. In addition, the Group considers whether there has been a significant increase in credit risk depending on the
characteristics of each debt instrument.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised
(i.e. removed from the Group’s consolidated balance sheet) when:
• the rights to receive cash flows from the asset have expired; or
• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a “pass-through” arrangement, and either (a) the Group has transferred substantially all the risks
and rewards of the asset; or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if, and
to what extent, it has retained the risks and rewards of ownership. When it has neither: transferred nor retained substantially all of the risks and
rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing
involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on
a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount
of the asset and the maximum amount of consideration that the Group could be required to repay.
Impairment
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs
are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from
the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition,
ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk,
but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
(ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables,
or; derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade
and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
•
•
financial liabilities at fair value through profit or loss; and
financial liabilities at amortised cost (loans and borrowings and bonds).
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Financial liabilities at amortised cost
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured
at amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in the profit or loss when the liabilities are
derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the profit or loss.
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Financial Statements Note 5 – Significant accounting policies continued
L. Financial instruments continued
(ii) Financial liabilities continued
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the profit or loss.
(iii) Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right
to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
M. Share capital
Ordinary shares are classified as equity and are stated at the proceeds received net of direct issue costs.
N. Share buyback
Consideration paid for the share buyback is recognised against the additional paid in capital. Any excess of the consideration paid over the
weighted average price of shares in issue is debited to the retained earnings.
O. Employee Benefit Trust
Consideration paid/received for the purchase/sale of shares subsequently put in the Employee Benefit Trust, which is controlled by the
Company, is recognised directly in equity. The cost of shares held is presented as a separate reserve (the “Employee Benefit Trust reserve”).
Any excess of the consideration received on the sale of treasury shares over the weighted average cost of the shares sold is credited to
retained earnings.
P. Dividends
Dividends are recognised when they become legally due. In the case of interim dividends to equity shareholders, this is when paid by the
Directors. In the case of final dividends, this is when they are declared and approved by the shareholders at the AGM.
Q. Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets)
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
Goodwill is tested semi-annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of disposal. Value in use is based on the
estimated future cash flows, discounted to their present value using a post-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in the profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the
CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
R. Provisions
Provisions for legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for
future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the
class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be minimum.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the
end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability.
160 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 5 – Significant accounting policies continued
S. Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets.
The Group recognises lease liabilities to make lease payments and right of use assets representing the right to use the underlying assets.
(i) Right of use assets
The Group recognises right of use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any accumulated amortisation and impairment losses and adjusted for any remeasurement of
lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received. Right of use assets are amortised on a straight-line basis over the
shorter of the lease term and the estimated useful lives of the assets.
(ii) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made
over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties
for terminating the lease, if the lease term reflects the Group exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the
interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease
payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying asset. When the lease liability is remeasured in this way, a corresponding adjustment is
made to the carrying amount of the right of use asset or is recorded in the profit or loss if the carrying amount of the right of use asset has been
reduced to zero.
The cash payments made in relation to long-term leases is split between principal and interest paid on lease liability and disclosed within
financing activities in the consolidated statement of cash flows.
(iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to
leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on
a straight-line basis over the lease term and included within financing activities in the consolidated statement of cash flows.
T. Fair value measurement
“Fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability
takes place either: (a) in the principal market for the asset or liability; or (b) in the absence of a principal market, in the most advantageous market
for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 – quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 – valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• Level 3 – valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
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Financial Statements Note 5 – Significant accounting policies continued
U. Adjusted results
The Group discloses EBITDA, being the profit before interest, taxes, depreciation and amortisation. EBITDA is a measure of the Group’s overall
financial performance and profitability which the Directors consider useful to reflect the underlying performance of the business.
The Board of Directors believes that in order to best represent the trading performance and results of the Group, the reported numbers should
exclude certain non-cash items, one-off items and the impact of substantial reorganisations and acquisition-related items.
Adjusted EBITDA and Adjusted Profit/Loss after making these exclusions are therefore presented alongside the reported EBITDA and reported
Profit/loss in the consolidated statement of comprehensive income.
The Directors use the Adjusted EBITDA and Adjusted Profit/Loss 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.
Furthermore, compensation of the executives is based in part on the performance of the business based on Adjusted EBITDA.
Adjusted results exclude the following items:
• Material non-cash items: these items are excluded to better analyse the underlying cash transactions of the business as the management
regularly monitors the operating cash conversion to Adjusted EBITDA.
• Material one-off items: there items are excluded to get normalised results that are distorted by unusual or infrequent items unusual or
infrequent items that are excluded to get normalised results that were previously distorted by these items. Unusual items include highly
abnormal, one-off and only incidentally relating to the ordinary activities of the Group. Infrequent items are those which are not reasonably
expected to recur in the foreseeable future given the environment in which the Group operates.
• Material reorganisations and acquisition-related items: these items are excluded as they are not considered related to the ordinary activities
of the business and are not considered to be ongoing costs of the operations of the business.
In addition, management presents underlying adjusted results and constant currency adjusted results to the Board of Directors.
Underlying adjusted results are presented as an alternative performance measure to exclude the impact of acquisitions made in the period or
in the comparable period in order to present a more accurate “like-for-like” comparison over the comparable period.
Constant currency adjusted results are presented in order to try and present measures that exclude the effect of currency fluctuations. In view
of the fact that the Group has transactions in foreign currencies and may be affected from the fluctuations of the currencies, all transactions in
foreign currencies are converted to Euro using the exchange rate of the comparable period.
As these are non-GAAP measures, they should not be considered as replacements for IFRS measures. The Group’s definition of these non-GAAP
measures may not be comparable to other similarly titled measures reported by other companies. A full reconciliation of adjustments is included
in Note 10.
Note 6 – 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.
Judgements
In the process of applying the Group’s accounting policies management has made the following judgements, which have the most significant
effect on the amounts recognised in the consolidated financial statements.
Revenue from contracts with customers
The Group applies judgement in determining whether it is acting as a principal or an agent specifically on the revenue earned under the B2B
licensee fee stream. This income falls within the scope of IFRS 15 Revenue from Contracts with Customers. In making these judgements, the
Group considers, by examining each contract with its customers, which party has the primary responsibility for providing the services and is
exposed to the majority of the risks and rewards associated with providing the services, as well as if it has latitude in establishing prices, either
directly or indirectly. The business model of this division is predominantly a revenue share model which is based on royalties earned from B2C
business partners’ revenue.
IFRS 15, paragraph B37 describes indicators that an entity controls the specified good or service before it is transferred to a customer and
therefore acts as the principal. Based on this assessment it was concluded that Playtech is acting as an agent under the B2B licensee fee stream
due to the three indicators under B37 which are not satisfied as follows:
• Playtech is responsible in fulfilling the contract to the operator, principally in respect of the software solutions, and not to the end customer
which is the responsibility of the operator;
• there is no inventory risk as Playtech does not have the ability to direct the use of, and obtain substantially all of the remaining benefits from
the good or service before it is transferred to the end customer; and
• Playtech does not have any discretion in establishing prices set by the operator to third parties.
Based on the above it was determined that the Group was acting as agent and revenue is recognised as the net amount of B2B licensee fees
received. The majority of this B2B revenue is recognised when the gaming or betting activity used as the basis for the revenue share calculation
takes place, and furthermore is only recognised when collection is virtually certain with a legally enforceable right to collect.
162 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 6 – Significant accounting judgements, estimates and assumptions continued
Judgements continued
Internally generated intangible assets
The Group capitalises costs for product development projects. Expenditure on internally developed products is capitalised when it meets
the following criteria:
• adequate resources are available to complete and sell the product;
• the Group is able to sell the product;
• sale of the product will generate future economic benefits; and
• expenditure on the project can be measured reliably.
Initial capitalisation of cost is based on the management’s judgement that the technological and economic feasibility is confirmed, usually when
product development has reached a defined milestone and future economic benefits are expected to be realised according to an established
project management model. Following capitalisation, an assessment is performed in regard to project recoverability which is based on the
actual return of the project. During the year, the Group capitalised €57.5 million (2021: €51.3 million) and the carrying amount of capitalised
development costs as at 31 December 2022 was €123.2 million (2021: €122.3 million).
Adjusted performance measures
As noted in Note 5, paragraph U, the Group presents adjusted performance measures which differ from statutory measures due to exclusion
of certain non-cash and one-off items and material reorganisation and acquisition-related items from the actual results. The determination
of whether non-cash and one-off items and material reorganisation and acquisition-related items should form part of the adjusted results
is a matter of judgement and is based on whether the inclusion/exclusion from the results represent more closely the consistent trading
performance of the business. The items excluded from the adjusted measures are described in further detail in Note 10.
Provision for risks and charges and potential liabilities
The Group operates in a number of regulated markets and is subject to lawsuits and potential lawsuits regarding complex legal matters, which
are subject to a different degree of uncertainty in different jurisdictions and under different laws. For all material ongoing and potential legal
and regulatory claims against the Group, an assessment is performed to consider whether an obligation or possible obligation exists and
to determine the probability of any potential outflow to determine whether a claim results in the recognition of a provision or disclosure of a
contingent liability. The timing of payment of provisions is subject to uncertainty and may have an effect on the presentation of the provisions
as current and non-current liabilities in the balance sheet. Expected timing of payment and classification of provision is determined by the
management based on the latest information available at the reporting date. See Note 29 for further details.
Classification of equity call options
Background
In addition to the provision of software-related solutions as a B2B product, the Group also offers certain customers a form of offering (which
includes software and related services) which is termed a “structured agreement”. Structured agreements are customarily with customers which
have a gaming licence and are retail/land based operators that are looking to establish their online B2C businesses – these customers require
initial support beyond the provision of the Group’s standard B2B software technology. With this product offering, Playtech offers additional
services to support the customer’s B2C activities over and above the B2B software solution products.
Playtech generates revenues from the structured agreements as follows:
• the standard operator revenue (B2B licensee fee income as per Note 5D); and
• revenue based on predefined revenue generated by each customer under the structured agreement which is typically capped at a percentage
of the profit (also defined in each agreement) generated by the customer, which compensates Playtech for the additional services provided
(additional B2B services fee as per Note 5D).
Under these agreements, Playtech typically has a call option to acquire equity in the operating entities. If the call option is exercised by Playtech,
the Group would no longer provide certain services (which generally include technical and general strategic support services) and would no
longer receive the related additional B2B services fee. This mechanism is not designed as a control feature but mainly to protect Playtech’s
position should the customer be subject to an exit transaction. Playtech is therefore able to benefit from any value appreciation in the operation
and could also potentially cease to provide the additional B2B services should it choose to do so dependent on the nature of the exit transaction.
Playtech plc Annual Report and Financial Statements 2022
163
Financial Statements Note 6 – Significant accounting judgements, estimates and assumptions continued
Judgements continued
Classification of equity call options continued
Judgement applied
In respect of each of the structured agreements where the Group holds equity call options, management applies judgement to assess whether
the Group has control or significant influence. For each of the Group’s structured agreements an assessment was completed in Note 20 using
the below guidance.
The existence of control by an entity is evidenced if all of the below are met in accordance with IFRS 10 Consolidated Financial Statements,
paragraph 7:
• 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.
In the cases where the Group assessed that it exercises control over these arrangements, then the company is consolidated in the Group’s
annual results in accordance with IFRS 10.
The existence of significant influence by an entity is usually evidenced in one or more of the following ways in accordance with IAS 28 Investment
in Associates and Joint Ventures, paragraph 6:
• representation on the board of directors or equivalent governing body of the investee;
• participation in policy-making processes, including participation in decisions about dividends or other distributions;
• material transactions between the entity and its investee;
•
interchange of managerial personnel; or
• provision of essential technical information.
If the conclusion is that the Group has significant influence, the next consideration made is whether there is current access to net profits and
losses of the underlying associate. This is determined by the exercise conditions of each relevant equity call option and in particular whether
the options are exercisable at the end of each reporting period.
If the option is exercisable then the investment is accounted for using the equity accounting method. However, in the cases where the company
over which the Group has a current exercisable option generates profits, management made a judgement and concluded that Playtech’s share
of profits (were the option to be exercised) should not be recognised as it is unlikely that the profits will be realised as the existing shareholder
has the right, and is entitled, to extract distributable profits. As such management did not consider it appropriate to recognise any share of these
profits. However, in the cases where the associate has generated losses, the Group’s percentage share is recognised and deducted from the
carrying value of the investment in associate.
Management has made a further judgement that if the equity call option is not exercisable at the end of the reporting period, then the option
is recorded at fair value as per IAS 28, paragraph 14 and recognised as a derivative financial asset as per IFRS 9 Financial Instruments.
Furthermore, under some of these arrangements the Group has provided loan advances. In such instances a judgement was made as to
whether these amounts form part of the Group’s investment in the associate as per IAS 28, paragraph 38, with a key consideration being
whether the Group expects settlement to occur in the foreseeable future. In the case where this is not expected and there is no set repayment
term, then it is concluded that in substance these loans are extensions of the entity’s investment in the associate and therefore would form part
of the cost of the investment.
Finally, the Group has certain agreements in relation to the provision of services by service providers in connection with certain of the Group’s
obligations under their various structured agreements. Under these arrangements, the service providers have certain rights to equity. In order for
these rights to crystallise, the Group must first exercise the relevant option. A judgement was therefore made that no current liability exists under
IAS 32, until the point when Playtech exercises the option.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, which have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The
Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments may change due to market changes or circumstances arising that are beyond the
control of the Group. Such changes are reflected in the assumptions when they occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount, which is the higher of its fair
value less costs of disposal and its value in use. The value in use calculation is based on a discounted cash flow model (DCF). The cash flows
are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant
future investments that may enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the
discount rate used for the DCF model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. 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 19, including a sensitivity analysis for the
CGUs with lower headroom.
164 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 6 – Significant accounting judgements, estimates and assumptions continued
Estimates and assumptions continued
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 14.
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 assets. 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 €63.6 million. As at 31 December
2022, an additional deferred tax asset of €5.2 million was recognised. This additional deferred tax asset has been recognised as the Group’s
management has concluded that it is probable for the UK entities to continue to generate taxable profits in the future against which the Group
can utilise the tax deductions for goodwill and intangible assets giving a tax benefit of €68.8 million. This represents the benefit of the deductions
against forecast profits for the next five years. During the year, €12.0 million has been utilised and the net recognised deferred tax asset as
at 31 December 2022 amounts to €56.8 million. In addition, a total of €37.0 million of deferred tax asset has not been recognised in respect
of the benefit of future tax deductions expected to arise after the next five years for the remaining useful economic life of the goodwill and
intangible assets.
The Group reviewed the latest forecasts for the UK companies for the next five years, including their ability to continue to generate income
beyond the forecast period under the tax laws substantively enacted at the reporting date. Based on this, the Group’s management concludes
that it is probable that the UK companies will continue to generate taxable income in the future. 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.
The Group has recognised a deferred tax asset of €60.4 million in respect of tax losses and excess interest in the UK which are available to
offset against the future profits of the UK Group companies. Based on the current forecasts, these losses will be fully utilised over the next
five years.
Deferred tax assets in Italy
The Group has recognised a deferred tax asset of €23.1 million in respect of tax losses in Italy which are available to offset against the future
profits of the Italian Group companies. Based on the current forecasts, these losses will be fully utilised within the next five years.
The Group reviewed the latest forecasts for the Italian companies for the next five years, including their ability to continue to generate income
beyond the forecast period under the tax laws substantively enacted at the reporting date. Based on this, the Group management concludes
that it is probable that the Italian Group companies will continue to generate taxable income in the future against which the losses can be utilised.
Any future changes in the tax law or the structure of the Group could have a significant effect on the use of the tax deductions, including the
period over which the deductions can be utilised.
Playtech plc Annual Report and Financial Statements 2022
165
Financial Statements Note 6 – Significant accounting judgements, estimates and assumptions continued
Estimates and assumptions continued
Impairment of financial assets
The Group undertook a review of trade receivables and other financial assets, as applicable, and their expected credit losses (ECLs). The review
considered the macroeconomic outlook, customer credit quality, exposure at default, and effect of payment deferral options as at the reporting date.
The ECL methodology and definition of default remained consistent with prior periods. The model inputs, including forward-looking information,
scenarios and associated weightings, together with the determination of the staging of exposures, were revised. The Group’s financial assets
consist of trade and loans receivables and cash and cash equivalents. ECL on cash balances was considered and calculated by reference
to Moody’s credit rating for each financial institution, while ECL on trade and loans receivables was based on past default experience and an
assessment of the future economic environment. More details are included in Note 38.
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. This resulted in an additional provision for bad debts of €15.4 million (2021: €7.5 million) recognised in the profit or
loss in H1 2022 with nothing further recognised in H2 2022.
Sun Bingo agreement
Background
The News UK contract commenced in 2016 and was originally set for a five-year period to June 2021. Both parties have obligations under
the contract, which include News UK providing access to brand and related materials as well as other services. Playtech has the primary
responsibility for the operation of the arrangement, but both parties have contractual responsibilities.
The related brands are used in Playtech’s B2C service, where the Group acts as the principal, meaning that in the Group’s consolidated
statement of comprehensive income:
• revenue from B2C customers is recognised as income; and
• the fees paid to News UK for use of the brands are an expense as they are effectively a supplier.
In the original contract, the fees payable were subject to a predetermined annual minimum guarantee (MG) which Playtech had to pay
to News UK.
During the period from 2016 to 2018, performance was not in line with expectations, and as such, the MG made this operation significantly loss
making for the Group. This opened the negotiations with News UK for certain amendments to the contract, which were agreed and signed in
February 2019 as follows:
• the MG was still payable up until the end of the original contract period, being June 2021, with no MG payable after that; and
• the contract term was extended to permit Playtech access to News UK’s brands and other related materials and other services, for a longer
period, to allow Playtech to recover its MG payments and to make a commercial return as was always envisaged. The term of the contract was
extended to end at the earlier of: a) five years from the date when Playtech had fully recovered all MG payments made; or b) 15 years from the
renegotiation (i.e. June 2036).
Judgements made on recognition and measurement
The annual MG paid to News UK was recognised in Playtech’s profit or loss up until February 2019, essentially being expensed over the original
term of the contract. However, from the point at which the amended contract became effective, the timing of the MG paid (being based on the
original terms) no longer reflected the period over which Playtech was consuming the use of the News UK brands and other related services
from them. As such, a prepayment was recorded to reflect the amount that had been paid, as at each period end, which related to the future use
of the brands and services. IFRS do not have a specific standard that deals with accounting for prepayments; however, the asset recognised as
a prepayment is in accordance with IAS 1 Presentation of Financial Statements.
At the commencement of the agreement and on renegotiation of the contract, the Directors considered whether the nature of the arrangement
gave rise to any intangible assets. At contract inception the Directors concluded that there were no such assets to recognise as both parties
had contractual obligations under the agreement to deliver services, as explained above. Post the contract renegotiation, the amounts to be
paid in the remainder of the initial period were considered to be advanced payments in respect of amounts to be earned by News UK over the
remainder of the extended contract period. Consequently, the Directors did not believe that there was a fundamental change in the nature of
the arrangements and it was considered most appropriate to categorise the amounts paid as operating expense prepayments.
As noted above, the term of this renegotiated contract is dependent on the future profitability of the contract, and it was expected that the future
profitability would mean the contract would finish before the end of the fixed term period. For this reason, it was considered appropriate that the
prepayment recognised should be released to the profit or loss in line with this expected profitability, rather than on a straight-line basis.
The amounts held in non-current and current assets of €63.4 million and €3.6 million in Notes 21 and 23, respectively, are the difference between
the MG actually paid to News UK from February 2019 to June 2021 and the amounts recognised in the Group’s profit or loss from February 2019
to December 2022.
166 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 6 – Significant accounting judgements, estimates and assumptions continued
Estimates and assumptions continued
Sun Bingo agreement continued
Judgements made on recognition and measurement continued
There is always a risk with any budgeting process that the plan may not be realised. This risk increases the longer the period for which the budget
covers and in this instance the period is potentially up to 15 years. When producing the budget management applies reasonable assumptions
based on known factors, but sometimes and outside of management’s control, these factors may vary. However, management also reviews these
forecasts at each reporting period and more regularly internally and adjusts the expense released accordingly. Based on the most recent forecasts
and current profitability and the fact that the Group had been running the operation since 2016 and therefore has significant experience of the level
of profitability that can be derived from the operation, it is confident that the performance of the business will allow the full recovery of this asset,
before the contract ends.
Calculation of legal provisions
The Group ascertains a liability in the presence of legal disputes or ongoing lawsuits when it believes it is probable that a financial outlay will take
place and when the amount of the losses can be reasonably estimated. The Group is subject to lawsuits regarding complex legal problems,
which are subject to a differing degree of uncertainty (also due to a complex legislative framework), including the facts and the circumstances
inherent to each case, the jurisdiction and the different laws applicable. Given the uncertainties inherent to these problems, it is difficult to predict
with certainty the outlay which will derive from these disputes and it is therefore possible that the value of the provisions for legal proceedings
and disputes may vary depending on future developments in the proceedings underway. The Group monitors the status of the disputes
underway and consults with its legal advisers and experts on legal and tax-related matters. More details are included in Note 29.
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 perform the valuation. The Group works closely with the qualified valuers to
establish the appropriate valuation techniques and inputs to the model.
As mentioned in Note 20, 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), which are accounted at fair value through profit or loss
under IFRS 9.
The fair value of the equity investments that are not listed and of the derivative financial assets, rely on non-observable inputs that require a
higher level of management judgement to calculate a fair value than those based wholly on observable inputs. Valuation techniques are used
to calculate fair values include comparisons with similar financial instruments for which market observable prices exist, discounted cash flow
analysis and other valuation techniques commonly used by market participants. Upon the use of DCF method, the Group assumes that the
expected cash flows are based on the EBITDA.
The Group only uses models with unobservable inputs for the valuation of certain unquoted equity investments. In these cases, estimates are
made to reflect uncertainties in fair values resulting from a lack of market data inputs, for example, as a result of illiquidity in the market. Inputs
into valuations based on unobservable data are inherently uncertain because there is little or no current market data available from which to
determine the level at which an arm’s length transaction would occur under normal business conditions. Unobservable inputs are determined
based on the best information available. Further details on the fair value of assets are disclosed in Note 20, which includes a significant
judgement relating to the public announcement made by the Group on 6 February 2023 where Playtech plc is seeking a declaration from the
English Courts to obtain clarification on a point of disagreement between the Group and Caliplay.
The following table shows the carrying amount and fair value of non-current assets, as disclosed in Note 20, including their levels in the fair value hierarchy.
Non-current assets
Other investments (Note 20B)
Derivative financial assets (Note 20C)
Non-current assets
Other investments (Note 20B)
Derivative financial assets (Note 20C)
Carrying amount
Fair value
2022
€’m
9.2
636.4
645.6
Level 1
€’m
Level 2
€’m
1.4
—
1.4
—
—
—
Carrying amount
Fair value
2021
€’m
8.1
622.2
630.3
Level 1
€’m
Level 2
€’m
1.6
—
1.6
—
—
—
Level 3
€’m
7.8
636.4
644.2
Level 3
€’m
6.5
622.2
628.7
Playtech plc Annual Report and Financial Statements 2022
167
Financial Statements
Note 7 – Segment information
The Group’s reportable segments are strategic business units that offer different products and services.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker has been identified as the management team including the Chief Executive Officer and the Chief Financial Officer.
The operating segments identified are:
• B2B: including Casino, Services, Sport, Bingo, Poker and Other;
• B2C: including Snaitech, Sun Bingo and Other B2C and HAPPYBET; and
• Financial: including B2C and B2B CFD (discontinued operations).
The Group-wide profit measures are Adjusted EBITDA and Adjusted Profit (see Note 10).
Year ended
31 December 2022
Revenue
Adjusted EBITDA
Adjusted Profit/(Loss)
attributable to the owners
of the Company
Total assets
Total liabilities
Year ended
31 December 2021
Revenue
Adjusted EBITDA
Adjusted Profit/(Loss)
attributable to the owners
of the Company
Total assets
Total liabilities
B2B
€’m
Snaitech
€’m
Sun Bingo
and Other
B2C
€’m
HAPPYBET
€’m
Intercompany
B2C
€’m
Total B2C
€’m
Intercompany
€’m
Total
Gaming –
continuing
operations
€’m
Financial –
discontinued
operations
€’m
Total
€’m
632.4
160.2
899.8
254.2
65.3
2.0
20.1
(10.8)
(2.1)
983.1
— 245.4
(13.7)
—
1,601.8
405.6
74.5
33.8
1,676.3
439.4
43.8
1,853.2
697.2
127.4
1,070.4
603.2
1.1
89.7
14.6
(11.8)
9.1
6.4
—
116.7
— 1,169.2
— 624.2
—
160.5
— 3,022.4
1,321.4
—
41.2
201.7
— 3,022.4
— 1,321.4
B2B
€’m
Snaitech
€’m
554.3
139.2
584.7
182.6
45.9
1,911.1
842.7
83.2
1,154.7
867.3
Sun Bingo
and Other
B2C
€’m
61.9
6.7
10.3
92.9
11.4
18.2
(11.4)
(11.8)
6.2
5.9
HAPPYBET
€’m
Intercompany
B2C
€’m
Total B2C
€’m
Intercompany
€’m
(1.1)
—
663.7
177.9
(12.6)
—
Total
Gaming –
continuing
operations
€’m
1,205.4
317.1
Financial –
discontinued
operations
€’m
Total
€’m
46.6
(23.0)
1,252.0
294.1
—
81.7
— 1,253.8
884.6
—
—
—
—
127.6
3,164.9
1,727.3
(13.8)
487.4
343.8
113.8
3,652.3
2,071.1
168 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 7 – Segment information continued
Geographical analysis of non-current assets
The Group’s information about its non-current assets by location is detailed below:
Italy
UK
Austria
Alderney
Sweden
Gibraltar
Cyprus
Latvia
Australia
Ukraine
Estonia
British Virgin Islands
Rest of World
2022
€’m
746.1
328.4
131.5
75.9
59.9
27.9
22.0
15.5
18.8
8.8
7.8
8.2
59.7
2021
€’m
755.5
332.6
132.8
100.0
70.2
37.7
25.6
15.9
15.1
11.3
9.4
8.0
27.5
1,510.5
1,541.6
Note 8 – Discontinued operation
The results of the discontinued operations for the year are presented below:
Revenue
Distribution costs before depreciation and amortisation
Administrative expenses before depreciation and amortisation
Impairment of financial assets
EBITDA
Reversal of impairment of asset held for sale
Finance income
Finance costs
Profit on disposal of discontinued operations (Note 25C/25B)
Profit/(loss) before taxation
Tax expense
Profit/(loss) from discontinued operations, net of tax
2022
2021
Actual
€’m
74.5
(34.9)
(13.3)
(1.9)
24.4
—
11.6
(0.5)
15.1
50.6
(3.6)
47.0
Adjusted
€’m
74.5
(34.8)
(4.0)
(1.9)
33.8
—
11.6
(0.5)
—
44.9
(3.7)
41.2
Actual
€’m
46.6
(56.9)
(15.9)
(4.7)
(30.9)
2.0
12.0
(0.9)
7.6
(10.2)
(1.9)
(12.1)
Adjusted
€’m
46.6
(56.4)
(8.5)
(4.7)
(23.0)
—
12.0
(0.9)
—
(11.9)
(1.9)
(13.8)
Playtech plc Annual Report and Financial Statements 2022
169
Financial Statements
Note 8 – Discontinued operation continued
All of the profit from discontinued operations, net of tax in the year ended 31 December 2022 relates to the Financial segment, which was
disposed during the current year (refer to Note 25C). Included in the loss from discontinued operations, net of tax, in the prior year is a profit
on disposal of €7.6 million relating to the “YoYo” business, which was part of the Group’s Casual and Social Gaming business, all fully disposed
during 2021. The remainder of the 2021 results included in the loss from discontinued operations, net of tax, all relate to the Financials segment.
The following tables provide a full reconciliation between adjusted and actual results from discontinued operations:
For the year ended 31 December 2022
Reported as actual
Employee stock option expenses
Professional fees1
Profit on disposal of discontinued operations (Note 25C)
Adjusted measure
Profit from
discontinued
operations
attributable to
the owners of
the Company
€’m
47.0
0.2
9.1
(15.1)
41.2
Revenue
€’m
74.5
—
—
—
74.5
EBITDA
€’m
24.4
0.3
9.1
—
33.8
1
On the completion of the transaction the break fee of US$8.8 million to the Consortium that had previously agreed to acquire the Financial segment, as announced in May 2021 was triggered and
therefore paid. This is included in professional fees.
For the year ended 31 December 2021
Reported as actual
Employee stock option expenses
Professional fees
Reversal of impairment of asset held for sale (Note 25C)
Profit on disposal of discontinued operations (Note 25B)
Adjusted measure
Earnings per share from discontinued operations
Loss from
discontinued
operations
attributable to
the owners of
the Company
€’m
(12.1)
0.8
7.1
(2.0)
(7.6)
(13.8)
Revenue
€’m
46.6
—
—
—
—
46.6
EBITDA
€’m
(30.9)
0.8
7.1
—
—
(23.0)
2022
2021
Actual
Adjusted
Actual
Adjusted
Basic (cents)
Diluted (cents)
15.7
15.1
13.7
13.2
The net cash flows incurred by the Financial segment in the period are as follows:
Operating
Investing
Financing
Net cash inflow/(outflow)
The above net cash inflow/(outflow) does not include the disposal proceeds.
(4.0)
(4.0)
2022
€’m
28.2
(3.8)
(1.1)
23.3
(4.6)
(4.6)
2021
€’m
(2.6)
(6.9)
(2.2)
(11.7)
170 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 9 – Revenue from contracts with customers
The Group has disaggregated revenue into various categories in the following table which is intended to:
• depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by recognition date; and
• enable users to understand the relationship with revenue segment information provided in the segmental information note.
Set out below is the disaggregation of the Group’s revenue:
Revenue analysis by geographical location of licensee, product type, timing of transfer of performance obligations and regulated vs
unregulated by geographical major markets
The revenues from B2B (consisting of licensee fee, fixed-fee income, revenue received from the sale of hardware, cost-based revenue and
additional B2B services fee), B2C and Financials are described in Note 5D.
For the year ended 31 December 2022
Primary geographic markets
Italy
UK
Mexico
Malta
Philippines
Spain
Gibraltar
Poland
Netherlands
Greece
Curacao
Germany
British Virgin Islands
Ireland
Colombia
Rest of World
Product type
B2B licensee fee
B2B fixed-fee income
B2B cost-based revenue
B2B revenue received from the sale of hardware
Additional B2B services fee
Total B2B
Snaitech
Sun Bingo and Other B2C
HAPPYBET
Intercompany
Total B2C
Intercompany
Total intercompany
Financial
B2B
€’m
35.1
127.0
123.7
55.7
51.2
27.7
24.9
21.9
20.2
20.5
20.2
0.8
—
10.0
9.1
84.4
632.4
B2B
€’m
451.7
42.1
59.9
13.2
65.5
632.4
—
—
—
—
—
—
—
—
B2C
€’m
Intercompany
€’m
Total Gaming
– continuing
operations
€’m
Financial
– discontinued
operations
€’m
897.7
65.2
—
—
—
—
—
—
—
—
—
16.8
—
—
—
3.4
983.1
(10.0)
(3.7)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(13.7)
B2C
€’m
Intercompany
€’m
—
—
—
—
—
—
899.8
65.3
20.1
(2.1)
983.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(13.7)
(13.7)
—
922.8
188.5
123.7
55.7
51.2
27.7
24.9
21.9
20.2
20.5
20.2
17.6
—
10.0
9.1
87.8
1,601.8
Total Gaming
– continuing
operations
€’m
451.7
42.1
59.9
13.2
65.5
632.4
899.8
65.3
20.1
(2.1)
983.1
(13.7)
(13.7)
—
1.3
34.1
0.3
0.1
—
1.0
—
0.1
1.0
0.3
—
1.0
16.0
0.3
0.4
18.6
74.5
Financial
– discontinued
operations
€’m
—
—
—
—
—
—
—
—
—
—
—
—
—
74.5
74.5
Total
€’m
924.1
222.6
124.0
55.8
51.2
28.7
24.9
22.0
21.2
20.8
20.2
18.6
16.0
10.3
9.5
106.4
1,676.3
Total
€’m
451.7
42.1
59.9
13.2
65.5
632.4
899.8
65.3
20.1
(2.1)
983.1
(13.7)
(13.7)
74.5
1,676.3
632.4
983.1
(13.7)
1,601.8
Playtech plc Annual Report and Financial Statements 2022
171
Financial Statements Note 9 – Revenue from contracts with customers continued
Revenue analysis by geographical location of licensee, product type, timing of transfer of performance obligations and regulated vs
unregulated by geographical major markets continued
For the year ended 31 December 2022 continued
B2C
€’m 1
Intercompany
€’m
Total Gaming
– continuing
operations
€’m
Financial
– discontinued
operations
€’m
28.4
954.7
983.1
(13.7)
—
(13.7)
633.9
967.9
1,601.8
74.5
—
74.5
Total
€’m
708.4
967.9
1,676.3
2022
€’m
144.7
184.6
126.7
5.6
461.6
103.6
565.2
67.2
632.4
Total
€’m
607.9
204.1
90.6
67.6
52.8
27.9
23.4
19.1
18.3
14.5
12.3
10.4
8.3
5.9
5.7
83.2
Intercompany
€’m
Total Gaming
– continuing
operations
€’m
Financial
– discontinued
operations
€’m
(7.6)
(4.1)
—
—
—
—
—
(0.8)
—
—
—
—
—
—
—
(0.1)
606.7
190.0
90.3
67.6
52.3
27.9
21.7
16.8
16.8
14.4
12.2
7.2
8.5
5.7
5.4
61.9
1.2
14.1
0.3
—
0.5
—
1.7
2.3
1.5
0.1
0.1
3.2
(0.2)
0.2
0.3
21.3
B2C
€’m
583.6
61.9
—
—
—
—
—
16.4
—
—
—
—
—
—
—
1.8
663.7
(12.6)
1,205.4
46.6
1,252.0
Timing of transfer of performance obligations
Recognised over time
Recognised at the point in time
1 B2C revenue recognised at the point in time is recorded under IFRS 9.
Regulated – Americas
Regulated – Europe (excluding UK)
Regulated – UK
Regulated – Rest of World
Total regulated B2B revenue
Unregulated excluding Asia
Total core B2B revenue
Asia
Total B2B Gambling revenue
For the year ended 31 December 2021
Primary geographic markets
Italy
UK
Mexico
Philippines
Malta
Gibraltar
Spain
Germany
Greece
Poland
Curacao
Netherlands
Colombia
Romania
Norway
Rest of World
B2B
€’m
619.2
13.2
632.4
B2B
€’m
30.7
132.2
90.3
67.6
52.3
27.9
21.7
1.2
16.8
14.4
12.2
7.2
8.5
5.7
5.4
60.2
554.3
172 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 9 – Revenue from contracts with customers continued
Revenue analysis by geographical location of licensee, product type, timing of transfer of performance obligations and regulated vs
unregulated by geographical major markets continued
For the year ended 31 December 2021 continued
Total Gaming
– continuing
operations
€’m
Financial
– discontinued
operations
€’m
404.0
48.5
45.3
7.1
49.4
554.3
584.7
61.9
18.2
(1.1)
663.7
(12.6)
(12.6)
—
1,205.4
Total Gaming
– continuing
operations
€’m
556.8
648.6
1,205.4
—
—
—
—
—
—
—
—
—
—
—
—
—
46.6
46.6
Financial
– discontinued
operations
€’m
46.6
—
46.6
Product type
B2B licensee fee
B2B fixed-fee income
B2B cost-based revenue
B2B revenue received from the sale of hardware
Additional B2B services fee
Total B2B
Snaitech
Sun Bingo and Other B2C
HAPPYBET
Intercompany
Total B2C
Intercompany
Total intercompany
Financial
B2B
€’m
404.0
48.5
45.3
7.1
49.4
554.3
—
—
—
—
—
—
—
—
B2C
€’m
—
—
—
—
—
—
584.7
61.9
18.2
(1.1)
663.7
—
—
—
554.3
663.7
Intercompany
€’m
—
—
—
—
—
—
—
—
—
—
—
(12.6)
(12.6)
—
(12.6)
Timing of transfer of performance obligations
Recognised over time
Recognised at the point in time
1 B2C revenue recognised at the point in time is recorded under IFRS 9.
B2B
€’m
547.2
7.1
554.3
B2C
€’m 1
Intercompany
€’m
22.2
641.5
663.7
(12.6)
—
(12.6)
Regulated – Americas
Regulated – Europe (excluding UK)
Regulated – UK
Regulated – Rest of World
Total regulated B2B revenue
Unregulated excluding Asia
Total core B2B revenue
Asia
Total B2B Gambling revenue
Total
€’m
404.0
48.5
45.3
7.1
49.4
554.3
584.7
61.9
18.2
(1.1)
663.7
(12.6)
(12.6)
46.6
1,252.0
Total
€’m
603.4
648.6
1,252.0
2021
€’m
101.3
141.4
132.1
3.9
378.7
93.7
472.4
81.9
554.3
Playtech plc Annual Report and Financial Statements 2022
173
Financial Statements Note 9 – Revenue from contracts with customers continued
Revenue analysis by geographical location of licensee, product type, timing of transfer of performance obligations and regulated vs
unregulated by geographical major markets continued
There were no changes in the Group’s revenue measurement policies and procedures in 2021 and 2022. The vast majority of the Group’s B2B
contracts are for the delivery of services within the next 12 months. Furthermore, no individual licensee in 2022 and 2021 accounted for more
than 10% of the total gaming revenue and the total revenue of the Group.
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 31 December 2022 was €6.0 million
(2021: €8.1 million).
The movement in contract liabilities during the year was the following:
Balance at 1 January
Recognised during the year
Realised in the profit or loss
Balance at 31 December
2022
€’m
8.1
8.4
(10.5)
6.0
2021
€’m
11.8
7.0
(10.7)
8.1
174 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 10 – Adjusted items
Management regularly uses adjusted financial measures internally to understand, manage and evaluate the business and make operating
decisions. These adjusted measures are among the primary factors management uses in planning for and forecasting future periods. The
primary adjusted financial measures are Adjusted EBITDA and Adjusted Profit, which management considers are relevant in understanding
the Group’s financial performance. The definitions of adjusted items and underlying adjusted results are disclosed in Note 5.
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:
For the year ended 31 December 2022
Reported as actual
Employee stock option expenses1
Professional fees2
Fair value change and finance cost on contingent consideration
and redemption liability3
Ukraine employee support costs4
Onerous contract5
Fair value change of equity instruments6
Fair value change of derivative financial assets6
Fair value loss on convertible loans7
Amortisation of intangibles on acquisitions8
Impairment of tangible and intangible assets9
Loss on disposal of subsidiary10
Deferred tax on acquisitions8
Tax related to uncertain positions11
Revenue
€’m
1,601.8
—
—
EBITDA –
B2B
€’m
EBITDA –
B2C
€’m
138.4
7.1
15.7
234.1
0.9
—
EBITDA
€’m
372.5
8.0
15.7
—
—
—
—
—
—
—
—
—
—
—
(4.3)
3.3
—
—
—
—
—
—
—
—
—
—
—
10.4
—
—
—
—
—
—
—
—
(4.3)
3.3
10.4
—
—
—
—
—
—
—
—
Adjusted measure
Constant currency impact
1,601.8
(19.8)
160.2
—
245.4
—
405.6
(17.9)
Underlying adjusted result on constant currency basis
1,582.0
—
— 387.7
Profit
from
continuing
operations
attributable
to the
owners
of the
Company
€’m
Profit
before
tax from
continuing
operations
€’m
40.6
8.0
15.7
(4.2)
3.3
10.4
0.3
(6.0)
3.0
42.0
38.5
8.8
(8.3)
8.4
95.6
8.0
15.7
(4.2)
3.3
10.4
0.3
(6.0)
3.0
42.0
38.5
8.8
—
—
Profit–
B2C
€’m
83.4
0.9
—
—
—
10.4
—
—
—
28.8
(0.2)
—
(6.6)
—
116.7
—
160.5
(27.1)
215.4
—
—
133.4
—
(Loss)/
Profit –
B2B
€’m
(42.8)
7.1
15.7
(4.2)
3.3
—
0.3
(6.0)
3.0
13.2
38.7
8.8
(1.7)
8.4
43.8
—
—
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 potential sale of the Group. These expenses are not considered ongoing costs of operations and therefore are excluded.
3 Fair value change and finance costs on redemption liability related to the acquisition of Statscore. These expenses are not considered ongoing costs of operations and therefore are excluded.
4 Financial support provided to the employees based in Ukraine. These expenses are not considered ongoing costs of operations and therefore are excluded.
5 One off payment to terminate an onerous contract with a former service provider made in H1 2022. This expense is not considered an ongoing cost of operations and therefore is excluded.
6 Fair value change of equity instruments and derivative financial assets. These are excluded from the results as they relate to unrealised profit/loss.
7 Fair value loss on convertible loans relates to Gameco. This write off is not considered an ongoing cost of operations and is excluded. Refer to Note 20B.
8
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.
9
Impairment of tangible and intangible assets mainly relates to the impairment of Eyecon €13.6 million, Quickspin €7.0 million, Bingo VF €12.5 million and IGS €5.6 million. Refer to Note 19.
10 Loss arising on the disposal of Statscore, previously a subsidiary of the Group. Even though, Statscore was a separate CGU which was tested for impairment biannually up to the date of disposal,
it didn’t meet the criteria of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations of being a separate major line of business for the Group. As such it was not presented separately
as discontinued operations as at 31 December 2022. This loss is not considered an ongoing cost of operations and therefore is excluded. Refer to Note 20A.
11 Change in estimates related to uncertain overseas tax positions in respect of prior years.
Playtech plc Annual Report and Financial Statements 2022
175
Financial Statements Note 10 – Adjusted items continued
For the year ended 31 December 2021
Reported as actual
Employee stock option expenses1
Professional fees2
Fair value change and finance cost on redemption liability3
Charitable donation4
Provision for other receivables5
Settlement of legal matter6
Fair value change and finance cost on contingent consideration3
Fair value change of equity instruments7
Fair value change of derivative financial assets7
Amortisation of intangibles on acquisitions8
Impairment of tangible and intangible assets9
Deferred tax on acquisitions8
Deferred tax on asset held for sale10
Deferred tax11
Adjusted measure
Constant currency impact
Underlying adjusted result on constant currency basis
Revenue
€’m
1,205.4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,205.4
—
1,205.4
EBITDA –
B2B
€’m
EBITDA –
B2C
€’m
EBITDA
€’m
Profit –
B2B
€’m
Profit–
B2C
€’m
Profit
from
continuing
operations
attributable
to the
owners
of the
Company
€’m
105.5
11.5
13.9
1.3
3.5
1.2
2.3
—
—
—
—
—
—
—
—
139.2
—
—
175.8
1.6
0.5
—
—
—
—
—
—
—
—
—
—
—
—
177.9
—
—
629.2
281.3
11.5
13.1
13.9
14.4
1.4
1.3
3.5
3.5
1.2
1.2
2.3
2.3
4.4
—
—
1.6
— (583.2)
16.9
—
9.3
—
(2.5)
—
—
—
(63.6)
—
317.1
—
317.1
45.9
—
—
686.7
57.5
13.1
1.6
14.4
0.5
1.4
—
3.5
—
1.2
—
2.3
—
4.7
0.3
—
1.6
— (583.2)
34.8
17.9
21.6
12.3
(9.1)
(6.6)
(1.8)
(1.8)
(63.6)
—
81.7
—
—
127.6
0.5
128.1
Profit
before
tax from
continuing
operations
€’m
605.0
13.1
14.4
1.4
3.5
1.2
2.3
4.7
1.6
(583.2)
34.8
21.6
—
—
—
120.4
—
—
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
3
4
The majority of the professional fees equally relate to: (a) work completed in relation to the potential exercise of Playtech M&A Call Option (Note 20A); and (b) the potential sale of the Group.
These expenses are not considered ongoing costs of operations and therefore are excluded.
Fair value change and finance costs on redemption liability and contingent consideration related to the acquisition of Statscore, Eyecon and Wplay. These expenses are not considered ongoing
costs of operations.
In 2020, the Board of Directors approved a £3.0 million COVID-19 Recovery and Resilience Fund which was paid in the year ended 31 December 2021. This is a one-off payment and therefore
is excluded.
5 Provision against loan receivables that do not relate to the ordinary operations of the Group.
6 Settlement of legal matter which is not considered a recurring cost and therefore is excluded.
7 Fair value change of equity instruments and derivative financial assets. These are excluded from the results as they relate to unrealised profit/loss.
8
9
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.
Impairment of tangible and intangible assets mainly relates to the impairment of land before the classification as held for sale (Refer to Note 25A) and impairment of Bingo VF and several
capitalisation costs (Refer to Note 12).
10 Deferred tax recognised in respect of the assets classified as held for sale during the year. Please refer to Note 25A for further details.
11
The recognition of €63.6 million of deferred tax asset relates to the special project the Group completed on 1 January 2021 to move the tax residency of a number of companies from the Isle of Man
to the UK.
The following table provides a full reconciliation between adjusted and actual tax from continuing operations:
2022
€’m
55.0
8.3
—
—
(8.4)
54.9
2021
€’m
(81.7)
9.1
63.6
1.8
—
(7.2)
Tax on profit or loss for the year
Adjusted for:
Deferred tax on intangible assets on acquisitions
Deferred tax (refer to footnote 11 above)
Tax on disposal of asset held for sale
Tax related to uncertain positions
Adjusted tax
176 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 11 – Auditor’s remuneration
Group audit and Parent Company (BDO)
Audit of subsidiaries (BDO)
Audit of subsidiaries (non-BDO)
Total audit fees
Non-audit services provided by Parent Company auditor and its international member firms
Other non-audit services
Total non-audit fees
Note 12 – Impairment of tangible and intangible assets
(Reversal of)/impairment of property, plant and equipment (Note 17)
Impairment of intangible assets (Note 19)
2022
€’m
2.3
1.4
0.3
4.0
0.9
0.9
2022
€’m
(0.2)
38.7
38.5
2021
€’m
1.5
1.4
0.3
3.2
0.5
0.5
2021
€’m
12.5
9.1
21.6
Impairment of intangibles assets for 2022 relates to the impairment of Eyecon €13.6 million, Quickspin €7.0 million, Bingo VF €12.5 million
and IGS €5.6 million. Refer to Note 19.
Of the total impairment of property, plant and equipment of €12.5 million in 2021, an amount of €12.3 million relates to land classified as held
for sale. Refer to Note 25A.
Out of the total of €9.1 million in 2021, an amount of €6.4 million relates to the impairment of Bingo VF. The remaining relates to the impairment
of capitalised development costs. Based on the assessment performed at the reporting date, several projects will not be recoverable.
Note 13 – Finance income and costs
A. Finance income
Interest income
Net foreign exchange gain
B. Finance costs
Net foreign exchange loss
Interest on bonds
Interest on lease liability
Interest on loans and borrowings and other
Bank facility fees
Bank charges
Movement in contingent consideration and redemption liability
Fair value loss on convertible loans
Expected credit loss on loans receivable
Net finance costs
2022
€’m
2.4
9.2
11.6
2022
€’m
—
(35.7)
(5.5)
(6.0)
(7.0)
(14.1)
(0.1)
(3.0)
(1.6)
(73.0)
(61.4)
2021
€’m
1.1
—
1.1
2021
€’m
(0.5)
(36.7)
(5.3)
(5.6)
(1.8)
(13.0)
(4.8)
—
—
(67.7)
(66.6)
Playtech plc Annual Report and Financial Statements 2022
177
Financial Statements Note 14 – Tax expense/(credit)
Current tax expense
Income tax expense for the current year
Income tax relating to prior years
Withholding tax
Total current tax expense
Deferred tax
Origination and reversal of temporary differences
Deferred tax movements relating to prior years
Impact of changes in tax rates
Total deferred tax expense/(credit)
Total tax expense/(credit) from continuing operations
2022
€’m
19.3
9.1
0.3
28.7
23.5
8.1
(5.3)
26.3
55.0
2021
€’m
10.8
3.4
0.4
14.6
(78.8)
—
(17.5)
(96.3)
(81.7)
A reconciliation of the reported income tax charge of €55.0 million (2021: tax credit of €81.7 million) applicable to profit before tax of €95.6 million
(2021: profit before tax of €605.0 million) at the UK statutory income tax rate of 19% is as follows:
Profit for the year
Income tax expense/(credit)
Profit before income tax
Tax using the Company’s domestic tax rate (19% in 2021 and 2022)
Tax effect of:
Non-taxable fair value movements on call options
Tax exempt income
Non-deductible expenses
Deferred tax asset recognised on Group restructuring
Difference in tax rates applied in overseas jurisdictions
Impact of changes in tax rates
Increase in unrecognised tax losses
Adjustment in respect of previous years:
– Deferred tax asset
– Tax asset not provided
Total tax expense/(credit)
2022
€’m
40.6
55.0
95.6
18.2
(1.1)
(4.3)
19.8
(5.4)
13.8
(5.3)
2.1
8.0
9.2
55.0
2021
€’m
686.7
(81.7)
605.0
115.0
(110.9)
(7.5)
2.3
(75.2)
(3.6)
(5.5)
2.3
(2.0)
3.4
(81.7)
Reported tax charge/(credit)
A reported tax charge of €55.0 million from continuing operations arises on a profit before income tax of €95.6 million compared to an expected
charge of €18.2 million (2021: a tax credit of €81.7 million on profit before income tax of €605.0 million). The reported tax expense includes
adjustments in respect of prior years relating to current tax and deferred tax. The prior year adjustment in respect of current tax of €9.2 million
includes an additional provision of €8.4 million relating to uncertain overseas tax positions in respect of prior years. The prior year adjustment
relating to deferred tax of €8.1 million relates to the overprovision of deferred tax assets and an underprovision for deferred tax liabilities in
respect of goodwill.
The Group’s effective tax rate for the current period is 39.5%. The key reasons for the differences are:
• Profits of subsidiaries located in territories where the tax rate is higher than the UK statutory tax rate, this includes Snaitech profits in Italy.
• Expenses not deductible for tax purposes including professional fees, impairment of intangible assets and loss on disposal of subsidiaries.
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 19%. It should be noted that
the UK tax rate is set to increase to 25% from 1 April 2023. As such, the UK statutory headline rate of corporation tax is the basis on which the
applicable tax rate is computed.
In December 2022, European Union (EU) Member States unanimously adopted the Minimum Tax Directive via written procedure ensuring a
global minimum level of taxation (set at 15%) for multinational enterprise groups. GLoBE Model rules were released in March 2022 and broadly
EU Member States have until 31 December 2023 to transpose the Directive into national legislation with the rules to be applicable for fiscal years
starting on or after 31 December 2023. None of the countries in which the Group operates has enacted or substantively enacted Pillar Two
Model Rules as part of their national laws as of 31 December 2022. Whilst consultation on a number of areas remains ongoing, the Group will
continue to closely monitor developments.
178 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 14 – Tax expense/(credit) continued
Deferred tax
The deferred tax asset and liability are measured at the enacted or substantively enacted tax rates of the respective territories which are
expected to apply to the year in which the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date. The deferred tax balances within the financial statements reflect the increase in the UK’s main
corporation tax rate from 19% to 25% from 1 April 2023.
Note 15 – 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.
2022
2021
Profit attributable to owners of the Company
Basic (cents)
Diluted (cents)
Profit attributable to the owners of the Company from continuing operations
Basic (cents)
Diluted (cents)
Denominator – basic
Weighted average number of equity shares
Denominator – diluted
Weighted average number of equity shares
Weighted average number of option shares
Weighted average number of shares
Actual
€’m
87.6
29.2
28.1
2022
Actual
€’m
40.6
13.5
13.0
Adjusted
€’m
201.7
67.2
64.7
Adjusted
€’m
160.5
53.5
51.5
Actual
€’m
674.6
226.3
216.2
2021
Actual
€’m
686.7
230.3
220.1
Adjusted
€’m
113.8
38.2
36.5
Adjusted
€’m
127.6
42.8
40.9
2022
2021
Actual
Number
Adjusted
Number
Actual
Number
Adjusted
Number
300,059,994 300,059,994
298,229,795
298,229,795
300,059,994 300,059,994
11,792,385
11,792,385
298,229,795
13,882,774
298,229,795
13,882,774
311,852,379
311,852,379
312,112,569
312,112,569
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.
EPS for discontinued operations is disclosed in Note 8.
Note 16 – Employee benefits
Total staff costs comprise the following:
Salaries and personnel-related costs
Cash-settled share-based payments
Equity-settled share-based payments
Average number of personnel:
Distribution
General and administration
2022
€’m
427.0
(0.3)
8.3
435.0
6,269
538
6,807
2021
€’m
367.4
3.4
13.8
384.6
6,259
650
6,909
The Group has the following employee share option plans (ESOP) for the granting of non-transferable options to certain employees:
• the GTS 2010 Company Share Option Plan (CSOP). Options granted under these plan vest on the first day on which they become exercisable
which is three years after grant date;
• the Long Term Incentive Plan 2012 (LTIP). Awards (options, conditional awards, cash-settled awards, or a forfeitable share award) granted
under this plan vest on the first day on which they become exercisable which is typically between 18 and 36 months after grant date; and
• the Long Term Incentive Plan 2022 (LTIP22). Awards (options, conditional Share awards, Restricted shares, cash-settled awards) granted
under this plan vest on the first day on which they become exercisable which is typically after 36 months.
Playtech plc Annual Report and Financial Statements 2022
179
Financial Statements Note 16 – Employee benefits continued
The overall term of the ESOP is ten years. These options are settled in equity or cash once exercised. Option prices are denominated in GBP.
During 2022 the Group granted the following under its LTIP22:
• 492,765 nil cost awards subject to EPS growth, relative total shareholder return (TSR) against constituents of the FTSE 250 but excluding
the investment trusts index, and relative TSR against a sector comparator group of peer companies. The fair value per share according to
the Monte Carlo simulation model is between £2.71 and £4.58. Inputs used were as follows:
Expected life (years)
3
Share price at
grant date
£4.582
Dividend
yield
Nil
Risk
free rate
2.34%
Projection
period
(years)
Volatility
3
41%-49%
There were no grants during 2021.
At 31 December 2022 and 2021 the following options were outstanding:
Shares vested on 1 March 2018 at nil cost
Shares vested between 1 September 2016 and 1 March 2018 at nil cost
Shares vested on 1 March 2019 at nil cost
Shares vested between 1 September 2017 and 1 March 2019 at nil cost
Shares vested on 21 December 2019 at nil cost
Shares vested between 1 September 2017 and 1 April 2019 at nil cost
Shares vested on 1 March 2020 at nil cost
Shares vested on 1 March 2021 at nil cost
Shares vested between 1 March 2022 and 1 August 2022 at nil cost
Shares will vest by 19 December 2024 at nil cost
Shares will vest between 1 March 2023 and 26 October 2023 at nil cost
Shares will vest by August 18 2025 at nil cost
2022
Number
72,596
20,890
21,820
39,021
9,779
—
98,444
1,047,782
2,218,735
1,900,000
6,392,073
351,724
2021
Number
102,844
23,112
31,972
50,742
12,870
21,187
112,369
1,347,475
3,499,954
1,900,000
6,780,249
—
12,172,864
13,882,774
The total number of shares exercisable as of 31 December 2022 is 4,729,067 (2021: 2,402,571).
The total number of outstanding shares that will be cash settled is 561,385 (2021: 630,923). The total liability outstanding for the cash-settled
options is €3.1 million (2021: €3.8 million).
The following table illustrates the number and weighted average exercise prices of share options for the ESOP.
2021
Number
of options
2022
Number
of options
2022
Weighted average
exercise price
2021
Weighted average
exercise price
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Outstanding at the end of the year
13,882,774
492,765
(408,237)
(1,794,438)
16,886,778
—
(1,130,697)
(1,873,307)
12,172,864
13,882,774
—
—
—
—
—
£0.03
—
—
£0.05
—
Included in the number of options exercised during the year are 50,448 options (2021: 232,796) which were cash settled.
The weighted average share price at the date of exercise of options was £5.302 (2021: £6.506).
Share options outstanding at the end of the year have the following exercise prices:
Expiry date
Exercise price
21 December 2025
Between 21 December 2026 and 31 December 2026
Between 1 March 2027 and 28 June 2027
23 July 2028
Between 27 February 2029 and 19 December 2029
Between 17 July 2030 and 26 October 2030
18 August 2032
180 Playtech plc Annual Report and Financial Statements 2022
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2022
Number
93,486
70,620
98,444
1,044,771
4,121,746
6,392,073
351,724
2021
Number
125,956
116,771
112,369
1,344,464
5,402,965
6,780,249
—
12,172,864
13,882,774
Notes to the financial statements continuedFinancial Statements Note 17 – Property, plant and equipment
Computer
software
and hardware
€’m
Gaming
machines
€’m
Office furniture
and equipment
€’m
Buildings,
leasehold
buildings and
improvements
€’m
Cost
At 1 January 2022
Additions
Disposals
Reclassifications
132.1
19.8
(6.3)
(0.3)
96.2
15.8
(2.3)
—
At 31 December 2022
145.3
109.7
41.1
8.8
(2.0)
—
47.9
24.5
5.4
(0.2)
(1.9)
27.8
20.1
16.6
95.3
16.0
—
(6.1)
105.2
40.1
36.8
61.4
14.5
—
(2.0)
73.9
35.8
34.8
Computer
software
and hardware
€’m
Gaming
machines
€’m
Office furniture
and equipment
€’m
115.1
24.2
(7.2)
—
132.1
87.5
14.8
—
(7.0)
—
95.3
36.8
27.6
86.6
10.7
(1.1)
—
96.2
44.4
17.7
—
(0.7)
—
61.4
34.8
42.2
34.7
7.8
(1.4)
—
41.1
21.0
4.8
—
(1.3)
—
24.5
16.6
13.7
270.1
9.2
(3.8)
0.3
275.8
28.6
5.6
—
(3.8)
30.4
245.4
241.5
Buildings,
leasehold
buildings and
improvements
€’m
302.8
6.0
(2.9)
(35.8)
270.1
29.2
5.6
12.5
(2.9)
(15.8)
28.6
241.5
273.6
Total
€’m
539.5
53.6
(14.4)
—
578.7
209.8
41.5
(0.2)
(13.8)
237.3
341.4
329.7
Total
€’m
539.2
48.7
(12.6)
(35.8)
539.5
182.1
42.9
12.5
(11.9)
(15.8)
209.8
329.7
357.1
Accumulated depreciation and impairment losses
At 1 January 2022
Charge
Impairment loss
Disposals
At 31 December 2022
Net book value
At 31 December 2022
At 1 January 2022
Cost
At 1 January 2021
Additions
Disposals
Transfer to held for sale
At 31 December 2021
Accumulated depreciation and impairment losses
At 1 January 2021
Charge
Impairment loss
Disposals
Transfer to held for sale
At 31 December 2021
Net book value
At 31 December 2021
At 1 January 2021
Playtech plc Annual Report and Financial Statements 2022
181
Financial Statements Note 18 – Leases
Set out below are the carrying amounts of right of use assets recognised and the movements during the year:
At 1 January 2022
Additions/modifications
Disposal of subsidiary
Amortisation charge
At 31 December 2022
At 1 January 2021
Additions/modifications
Amortisation charge
At 31 December 2021
Set out below are the carrying amounts of lease liabilities and the movements during the year:
At 1 January
Additions/modifications
Disposal of subsidiary
Accretion of interest
Payments
Effect of movement in exchange rates
At 31 December
Current
Non-current
The maturity analysis of lease liabilities is disclosed in Note 38B.
The following are the amounts recognised in the profit or loss:
Amortisation expense of right of use assets
Interest expense on lease liabilities
Impact of early termination of lease contracts
Variable lease payments (included in distribution costs)
Office leases
€’m
Hosting
€’m
67.8
7.4
(0.2)
(14.5)
60.5
6.0
12.1
—
(7.0)
11.1
Office leases
€’m
Hosting
€’m
60.1
22.5
(14.8)
67.8
6.6
4.8
(5.4)
6.0
2022
€’m
90.1
18.8
(0.2)
5.5
(27.1)
(1.3)
85.8
31.8
54.0
85.8
2022
€’m
21.5
5.5
(0.7)
0.1
26.4
Total
€’m
73.8
19.5
(0.2)
(21.5)
71.6
Total
€’m
66.7
27.3
(20.2)
73.8
2021
€’m
82.5
26.1
—
5.3
(26.2)
2.4
90.1
20.3
69.8
90.1
2021
€’m
20.2
5.3
(1.2)
1.0
25.3
Rent concessions have been provided to the Group companies as a result of the COVID-19 pandemic. The Group elected to account for
qualifying rent concessions in the same way as they would if they were not lease modifications, resulting in accounting for the concession as a
variable lease payment. The amount recognised in the profit or loss to reflect changes in lease payments that arose from rent concessions to
which the Group has applied the practical expedient is €0.1 million (2021: €1.0 million).
182 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 19 – Intangible assets
Cost
At 1 January 2022
Additions
Assets acquired through business combinations
Disposal of subsidiary
Write offs
At 31 December 2022
Accumulated amortisation and impairment
losses
At 1 January 2022
Charge
Impairment loss
Disposal of subsidiary
Write offs
At 31 December 2022
Net book value
At 31 December 2022
At 1 January 2022
Cost
At 1 January 2021
Additions
Write offs
At 31 December 2021
Accumulated amortisation and impairment
losses
At 1 January 2021
Charge
Impairment loss
Write offs
At 31 December 2021
Net book value
At 31 December 2021
At 1 January 2021
Patents, domain
names and licence
€’m
Technology IP
€’m
Development
costs
€’m
Customer
list and affiliates
€’m
Goodwill
€’m
Total
€’m
191.4
32.2
—
—
—
223.6
110.6
24.3
—
—
—
134.9
88.7
80.8
86.5
—
2.9
(3.0)
(1.8)
84.6
72.7
2.9
—
(0.9)
(1.8)
72.9
11.7
13.8
363.6
59.4
—
(1.4)
(4.3)
417.3
241.3
49.7
7.0
—
(3.9)
294.1
123.2
122.3
526.9
—
—
(0.5)
—
526.4
346.2
32.9
—
(0.2)
—
378.9
147.5
180.7
Patents, domain
names and licence
€’m
Technology IP
€’m
Development
costs
€’m
Customer
list and affiliates
€’m
185.7
5.7
—
191.4
91.6
19.0
—
—
110.6
80.8
94.1
84.9
1.6
—
86.5
65.5
7.2
—
—
72.7
13.8
19.4
316.8
53.4
(6.6)
363.6
198.3
47.0
2.3
(6.3)
241.3
122.3
118.5
526.9
—
—
526.9
310.1
36.1
—
—
346.2
180.7
216.8
773.6
—
5.4
(12.4)
—
766.6
125.1
—
31.7
—
—
1,942.0
91.6
8.3
(17.3)
(6.1)
2,018.5
895.9
109.8
38.7
(1.1)
(5.7)
156.8
1,037.6
609.8
648.5
Goodwill
€’m
773.6
—
—
773.6
118.3
—
6.8
—
125.1
648.5
655.3
980.9
1,046.1
Total
€’m
1,887.9
60.7
(6.6)
1,942.0
783.8
109.3
9.1
(6.3)
895.9
1,046.1
1,104.1
Playtech plc Annual Report and Financial Statements 2022
183
Financial Statements Note 19 – Intangible assets continued
During the year, the research and development costs net of capitalised development costs were €88.3 million (2021: €80.1 million). The internal
capitalisation for the year was €57.5 million (2021: €51.3 million).
Out of the total amortisation charge of €109.8 million (2021: €109.3 million), an amount of €42.0 million (2021: €34.8 million) relates to the
intangible assets acquired through business combinations.
In accordance with IAS 36, the Group regularly monitors the carrying value of its intangible assets, including goodwill. Goodwill is allocated
to thirteen cash-generating units (CGUs) (2021: fifteen out of which two CGUs were under held for sale).
The allocation of the goodwill in CGUs (excluding CGUs held for sale) is as follows:
Snai
Sports B2B
Services
Casino
Quickspin
Eyecon
Poker
Statscore
Bingo retail
Bingo VF
VB retail
IGS
AUS GMTC
2022
€’m
259.7
132.5
109.9
50.8
19.8
3.0
15.6
—
9.5
—
4.6
—
4.4
609.8
2021
€’m
258.7
132.5
109.9
50.8
26.8
16.6
15.6
12.4
9.5
7.4
4.6
3.7
—
648.5
Management reviews CGUs for impairment bi-annually, or on the occurrence of an impairment indicator. The recoverable amount of each CGU
has been determined from value in use calculations based on cash flow projections covering five years plus a terminal value which have been
adjusted to take into account each CGU’s major events as expected in future periods.
Management has considered the ongoing economic uncertainty caused by the Russian invasion in Ukraine and the overall global recessionary
pressures, with a higher level of judgement and uncertainty implemented in the forecasts. A potential risk for future impairment exists should
there be a significant change in the economic outlook, versus those trends management anticipates in its forecasts due to the occurrence of
these events.
With the exception of CGUs which have been fully impaired to date and CGUs deemed sensitive to impairment from a reasonably possible
change in key assumptions as reviewed in further detail below, management has calculated the growth estimates for years one to five by
applying an average annual growth rate for revenue based on the underlying economic environment in which the CGU operates and the
expected performance over that period. Beyond this period, management has applied an annual growth rate of 2%. Management has included
appropriate capital expenditure requirements to support the forecast growth and assumed the maintenance of the current level of licences.
Management has also applied post-tax discount rates to the cash flow projections as summarised below.
2022 CGUs not sensitive to changes in assumptions:
Snai
Services
Casino
Poker
VB retail
2021 CGUs not sensitive to changes in assumptions:
Snai
Sports B2B
Services
Casino
Poker
IGS
VB retail
184 Playtech plc Annual Report and Financial Statements 2022
Average revenue
growth rate
2023-2027
9.4%
22.2%
5.5%
6.2%
10.0%
Discount
rate applied
17.3%
16.2%
13.9%
17.4%
12.4%
Average revenue
growth rate
2022-2026
Discount
rate applied
9.9%
23.7%
10.3%
6.0%
2.2%
24.0%
18.0%
15.0%
13.9%
14.2%
12.9%
14.7%
12.9%
11.2%
Notes to the financial statements continuedFinancial Statements Note 19 – Intangible assets continued
In relation to the Bingo VF, Eyecon, Quickspin and IGS CGUs, following impairment tests completed as at 31 December 2022, partial
impairments have been recognised as disclosed below. Certain other CGUs, which are specifically referred to below but not impaired,
are considered sensitive to changes in assumptions used for the calculation of value in use.
Bingo VF CGU
The recoverable amount of the Bingo VF CGU of €4.8 million, with carrying value of €21.1 million, has been determined using a cash flow forecast
that includes annual revenue growth rates between negative 1% and 10% over the one to five-year forecast period, a 2% long-term growth rate
and a post-tax discount rate of 15.8%. Following the contract termination of a significant licensee, the CGU is currently making considerable
efforts to recover through new geographical expansion and organic growth. However, growth is slower than expected, with new business
planned in new territories being delayed given the overall recessionary pressures worldwide. The impairment recognised in the current year
was €12.5 million which impairs the assets down to the recoverable amount.
Eyecon CGU
The recoverable amount of the Eyecon CGU showed signs of underperformance during H1 2022, mainly due to the fact that its operations are
highly concentrated in the UK online market which has seen a slowdown due to uncertain regulatory climate and as a result the recoverable
amount did not cover the carrying value, with an impairment loss of €13.6 million recognised in the profit or loss for the period ended 30 June 2022.
No further impairment has been recognised in the year. The recoverable amount of this CGU of €16.9 million, with a carrying value equal to
€16.1 million at 31 December 2022, was determined using a cash flow forecast that includes annual revenue growth rates between 0% to 10.0%
over the 1-5 year forecast period, 2% long-term growth rate and a post-tax discount rate of 15.6%. The recoverable amount would equal the
carrying value of the CGU if:
• the discount rate applied was higher by 4.8%, i.e. reaching a post-tax discount rate of 15.6%; or
• the revenue growth was lower by 0.2% when compared to the forecasted average five-year growth.
Quickspin CGU
The recoverable amount of the Quickspin CGU was impaired during H1 2022, given the risk the CGU bore from the proportion of revenues being
generated from Group’s B2B customers choosing to operate in areas with geopolitical tension, and the resulting 1% increase on the post-tax discount
rate of the CGU to mitigate for that factor. As a result of the above and also the decrease in the CGU performance which went through organisational
updates, an impairment loss of €7.0 million was recognised in the profit or loss for the period ended 30 June 2022. No further impairment was
recognised in the year. The recoverable amount of this CGU of €56.2 million, with a carrying value of €46.2 million at 31 December 2022, has been
determined using a cash flow forecast that includes annual revenue growth rates between 5.0% to 15.1% over the 1–5 year forecast period, 2% long-
term growth rate and a post-tax discount rate of 12.1%. The recoverable amount would equal the carrying value of the CGU if:
• the discount rate applied was higher by 18.3%, i.e., reaching a post-tax discount rate of 14.3%; or
• the revenue growth was lower by 2% when compared to the forecasted average five-year growth.
IGS CGU
The recoverable amount of the IGS CGU of €1.1 million, with carrying value of €6.7 million, has been determined using a cash flow forecast that
includes annual revenue growth rates between 10.0% and 77.0% over the one to five-year forecast period, a 2% long-term growth rate and a
post-tax discount rate of 22.0%. The unit was severely affected by COVID-19 and until recently it had not managed to bring revenue up to pre-COVID
levels with the business suffering from cancelled or postponed projects. As a result, the recoverable amount does not cover the carrying value,
with an impairment loss of €5.6 million recognised in the profit or loss.
If the revenue growth rate per annum is lower by 1%, then an additional impairment of €1.1 million would be recognised. Similarly, if the discount
rate increases by 1% to a post-tax discount rate of 23.0%, this would result in a further impairment of €0.4 million.
Bingo retail CGU
The recoverable amount of the Bingo retail CGU, with carrying value of €24.9 million, which has not been impaired, has been determined using a
cash flow forecast that includes annual revenue growth rates of 2% over the one to five-year forecast period, a 2% long-term growth rate and a
post-tax discount rate of 14.4%. The recoverable amount would equal the carrying value of the CGU if:
• the discount rate applied was higher by 8.1%, i.e. reaching a post-tax discount rate of 15.6%; or
• the revenue growth was lower by 1.0% when compared to the forecasted average five-year growth.
Sports B2B CGU
The recoverable amount of the Sports B2B CGU, with carrying value of €232.9 million, which has not been impaired, has been determined using
a cash flow forecast that includes annual revenue growth rates of 9.2% over the one to five-year forecast period, a 2% long-term growth rate and
a post-tax discount rate of 14.9%. 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 16.0%; or
• the revenue growth was lower by 0.5% when compared to the forecasted average five-year growth.
Playtech plc Annual Report and Financial Statements 2022
185
Financial Statements Note 20 – Investments and derivative financial assets
Introduction
Below is a breakdown of the relevant assets at 31 December 2022 and 2021 per the consolidated balance sheet:
A. Investments in associates
B. Other investments
C. Derivative financial assets
The following are the amounts recognised in the statement of comprehensive income:
Profit or Loss
A. Share of loss from associates
B. Unrealised fair value changes of equity investments
C. Unrealised fair value changes of derivative financial assets
Other comprehensive income
Foreign exchange movement from the derivative call options held in non-Euro functional currency subsidiaries
2022
€’m
36.6
9.2
636.4
682.2
2022
€’m
(3.8)
(0.3)
6.0
6.8
8.7
2021
€’m
5.2
8.1
622.2
635.5
2021
€’m
(0.6)
(1.6)
583.2
—
581.0
Where the underlying derivative call option is held in a non-Euro functional currency entity, the foreign exchange movement is recorded through
other comprehensive income. As at 31 December 2022, the foreign exchange movement of the derivative call option held in Caliplay (Note 20C)
is recorded in the profit or loss as the derivative call option is held in a Euro functional currency entity. The foreign exchange movement of the
derivative call option held in Wplay, Onjoc and Tenbet are recorded through other comprehensive income as the derivative call option is held in
a USD functional currency entity.
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 6.
186 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 20 – Investments and derivative financial assets continued
A. Investments in associates
Balance sheet
Caliplay
ALFEA SPA
Galera
LSports
Total investment in equity accounted associates
Profit and loss impact
Share of profit in ALFEA SPA
Share of loss in Galera
Share of loss in LSports
Total profit and loss impact
2022
€’m
—
1.7
—
34.9
36.6
2022
€’m
0.1
(3.6)
(0.3)
(3.8)
2021
€’m
—
1.6
3.6
—
5.2
2021
€’m
—
(0.6)
—
(0.6)
Caliplay
Background
During 2014 the Group entered into an agreement with Turística Akalli, S. A. de C.V, which has since changed its name to Corporacion Caliente
SAPI (“Caliente”), the majority owner of Tecnologia en Entretenimiento Caliplay, S. de R.L. de C.V (“Caliplay”), which is a leading 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 becoming the sole shareholder in Caliplay.
The terms of the existing structured agreement were varied, with the following key changes:
• A new additional option (in addition to the Playtech Call Option) was granted to the Group which allowed the Group to take up to a 49%
equity interest in a new acquisition vehicle should Caliplay be subject to a corporate transaction – this additional option is only exercisable in
connection with a corporate transaction and therefore was not exercisable at 31 December 2021 or 31 December 2022 (the “Playtech M&A
Call Option”).
• Caliente received a put option which would require Playtech to acquire September Holding Company B.V. for a nominal amount (the
“September Put Option”). This option has been exercised and the parties are in the process of transferring legal ownership of September
Holding Company B.V. to the Group.
The Group has no equity holding in Caliplay or Caliente and is currently providing services to Caliplay including technical and general strategic
support services for which it receives income (including an additional B2B services fee as described in Note 5). If the Playtech Call Option or
the Playtech M&A Call Option are exercised, the Group would no longer be entitled to receive the additional B2B services fee (and will cease to
provide the related services) which for the year ended 31 December 2022 was €66.3 million (2021: €49.4 million). In addition, for 45 days after
the finalisation of Caliplay’s 2021 accounts, Caliplay also had an option to redeem the Group’s additional B2B services fee or (if the Playtech
Call Option had been exercised at that time) Caliente would have the option to acquire Playtech’s 49% stake in Caliplay (together the “Caliente
Call Option”).
As per the public announcement made by the Group on 6 February 2023, Playtech plc is seeking a declaration from the English Courts to obtain
clarification on a point of disagreement between the parties in relation to the Caliente Call Option. The Group believes the Caliente Call Option
has expired and referred to its expiry having taken place in its interim report for the six-month period ended 30 June 2022, which was published
on 22 September 2022. If the Caliente Call Option was declared as being exercisable and was exercised, this would extinguish the Playtech Call
Option and the Playtech M&A Call Option.
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. 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. In respect of this change of control arrangement the Group has made a judgement that as at 31 December 2022 this has no impact on
the fair value calculation of the Playtech M&A Call Option.
Playtech plc Annual Report and Financial Statements 2022
187
Financial Statements
Note 20 – Investments and derivative financial assets continued
A. Investments in associates continued
Caliplay continued
Assessment of control and significant influence
As at 31 December 2022 and 2021 it was assessed that the Group did not have control over Caliplay, because it does not meet the criteria
of IFRS 10 Consolidated Financial Statements, paragraph 7 due to the following:
• Despite the Group previously having a nominated director on the Caliplay board in 2020 and having consent rights on certain decisions
(in each case, removed in 2021), there was no ability to control the relevant activities.
• Whilst they are not members of the board, the Group has the ability to appoint and change both the Chief Operating Officer (COO) and Chief
Marketing Officer (CMO) who form part of the management team. The COO and the CMO form part of the wider management team but not
the board and therefore are unable to control the relevant activities of Caliplay.
• The Playtech Call Option or the Playtech M&A Call Option, if exercised, would result in Playtech having up to 49% of the voting rights and
would not result in Playtech having control.
• Whilst the Group does receive variable returns from its structured agreement, it does not have the power to direct relevant activities so any
variation cannot arise from such a power.
As at 31 December 2022 and 2021, the Group has significant influence over Caliplay because it meets one or more of the criteria under IAS 28,
paragraph 6 as follows:
•
It has the ability to appoint key members of the Caliplay management team.
• The standard operator revenue by itself is not considered to give rise to significant influence; however, when combined with the additional B2B
services fee, this is an indicator of significant influence.
• The material transaction of the historical loan funding is also an indicator of significant influence.
Accounting for each of the options
The Playtech Call Option was exercisable at 31 December 2022 and 31 December 2021, although it still has not been exercised. As the Group
has significant influence and the option is exercisable, the investment is recognised as an investment in associate using the equity accounting
method which includes having current access to profits and losses. The cost of the investment was previously deemed to be the loan given
through September Holdings of €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 and therefore in accordance with IAS 28, paragraph 14 has been recognised as
derivative financial asset, and disclosed separately under part C of this note.
As per the judgement in Note 6, the Group did not consider it appropriate to equity account for the share of profits as the current 100%
shareholder is entitled to any undistributed profits.
Below is the financial information of Caliplay:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Revenue
Profit from continuing operations
Other comprehensive income /(loss), net of tax
Total comprehensive income
2022 1
€’m
96.7
30.3
(78.1)
—
48.9
532.1
30.4
2.5
32.9
2021 1
€’m
62.9
20.2
(67.5)
—
15.6
372.3
23.3
(1.0)
22.3
1 The 2021 balances above have been extracted from Caliplay’s audited 2021 financial statements whereas the 2022 balances have been extracted from the draft unaudited Caliplay financial statements.
Investment in ALFEA SPA
The Group has held 30.7% equity shares in ALFEA SPA since June 2018. At 31 December 2022 the Group’s value of the investment in ALFEA
SPA was €1.7 million (2021: €1.6 million). A share of profit of €0.1 million was recognised in the profit or loss for the year ended 31 December 2022
(2021: €Nil).
188 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 20 – Investments and derivative financial assets continued
A. Investments in associates continued
Investment in Galera
In June 2021, the Group entered into an agreement with Ocean 88 Holdings Ltd which is the sole holder of Galera Gaming Group (together
“Galera”), a company registered in Brazil. Galera offers and operates online and mobile sports betting and gaming (poker, casino, etc.) in Brazil.
They will continue to do so under the local regulatory license, when this becomes available, and will expand to other gaming and gambling
products based on the local license conditions.
The Group’s total consideration paid for the investment in Galera was $5.0 million (€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 31 December 2022, an amount of €26.9 million,
which is included in loans receivable under other non-current assets (refer to Note 36) has been drawn down (2021: €8.1 million). An amount
of €18.0 million has been loaned in the year ended 31 December 2022. The loan is required to be repaid to Playtech prior to any dividend
distribution to the current shareholders of Galera. The Group recognised an allowance for expected credit losses for the loan to Galera of
€1.1 million as at 31 December 2022 (2021: €Nil).
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 €3.6 million share of loss of associate would
have been recorded in the profit and loss. The €3.6 million has not been recognised as the investment in associate has been reduced to €Nil
(see below).
Playtech has assessed whether it holds power to control the investee and it was concluded that this is not the case. Even if the option is
exercised, it would only result in a 40% voting right over the operating entity and therefore no control.
Under the agreement in place:
• the standard operator income to be generated from services provided to Galera when combined with the additional B2B services fee,
the loan and certain other contractual rights, are all indicators of significant influence; and
• the Group provides standard B2B services (similar to services provided to other B2B customers) as well as additional services to Galera
that Galera requires to assist it in successfully running its operations, which could be considered essential technical information.
Considering the above factors, the Group has significant influence under IAS 28, paragraph 6 over Galera.
As the option is currently exercisable and gives Playtech access to the returns associated with the ownership interest, the investment is treated
as an investment in associate. Playtech’s interest in Galera is accounted for using the equity method in the consolidated financial statements.
Galera is still considered a start-up and therefore is currently loss making. If the call option is exercised by Playtech the Group will no longer
provide certain services and as such will no longer be entitled to the additional B2B service fee. The additional B2B services fee was €Nil in
the year ended 31 December 2022 (2021: €Nil).
The cost of the investment was deemed to be the price paid for the option of $5.0 million (€4.2 million). A share of the loss of €3.6 million
was recognised in the profit or loss in the year ended 31 December 2022 (2021: €0.6 million) making the resulting value of the investment at
31 December 2022 €Nil (2021: €3.6 million). The total share of loss from Galera was €7.2 million as at 31 December 2022 but is capped at
€3.6 million to bring the cost of the investment to €Nil.
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 30.89% 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 the profit or loss for the
year ended 31 December 2022 and is made up as follows:
Net asset position as at the date of the disposal (including goodwill of €12.4 million)
Net consideration
Loss on disposal
2022
€’m
14.7
(5.9)
8.8
Playtech plc Annual Report and Financial Statements 2022
189
Financial Statements Note 20 – Investments and derivative financial assets continued
A. Investments in associates continued
Investment in LSports continued
Background continued
Furthermore, the Group has an option to acquire up to 49% (so an additional 18.11%) of the equity of LSports (“LSports Option”). The LSports
Option is exercisable under the following conditions:
• within 90 days from the date of receipt of the LSports audited financial statements for each of the years ending 31 December 2024, 2025
and 2026; or
• at any time until 31 December 2026 subject and immediately prior to the consummation of an Initial Public Offering or Merger & Acquisition
event of LSports.
The fair value of the option acquired was €1.4 million which was part of the total consideration €36.7 million. Refer to part of Note 20C; there is no
movement on the fair value between acquisition and year end.
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 date of acquisition and 31 December 2022 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 Playtech having the right to appoint a director on the LSports board, as at 31 December 2022, one had not yet been appointed.
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;
• Playtech has neither the ability to change any members of the board or of the management of LSports; and
• as at 31 December 2022 the option is not exercisable and therefore can be disregarded in the assessment of power.
Per the above assessment Playtech does not hold power over the investee and as such does not have control.
As at 31 December 2022, the Group has significant influence over LSports because it meets one or more of the criteria under IAS 28, paragraph
6, the main one being Playtech having the ability to appoint a member on the board of LSports enabling it to therefore participate in policy-
making processes, including decisions about dividends and/or other distributions. As a result of this assessment LSports has been recognised
as an investment in associate.
The LSports option, which is not currently exercisable, is fair valued as per paragraph 14 of IAS 28 and shown as a derivative financial asset in
accordance with IFRS 9 and disclosed separately under part C of this note.
Purchase Price Allocation (PPA)
The Group has prepared a PPA following the acquisition of the investment, where any difference between the cost of the investment and
Playtech’s share of the net fair value of the LSports’ identifiable assets and liabilities results in goodwill.
Details of the provisional fair value of identifiable assets and liabilities acquired, investment consideration and goodwill are as follows:
Net book value of liabilities acquired
Fair value of customer contracts and relationships
Fair value of technology – internally developed
Fair value of brand
Deferred tax arising on acquisition
Total net assets
Total consideration
Goodwill
Playtech’s share
of net fair value
of the identifiable
assets and
liabilities acquired
2022
€’m
(1.3)
7.8
11.5
1.6
(2.3)
17.3
35.3
18.0
A total of €0.4 million and €0.1 million was recognised in relation to the amortisation of intangibles and the release of the deferred tax liability
respectively, arising on acquisition in the profit or loss for the year ended 31 December 2022, with a corresponding entry against the investment
in associate. The net effect of €0.3 million is recognised in share of loss in profit or loss as at 31 December 2022. No share of profit was recognised
as this amount is negligible.
190 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 20 – Investments and derivative financial assets continued
A. Investments in associates continued
Other investment in associates that are fair valued under IAS 28, paragraph 14
The following are also investments in associates where the Group has significant influence but where the option is not currently exercisable.
As there is no current access to profits, the relevant option is fair valued under IFRS 9, and disclosed as derivative financial assets under part C
of this note:
• Wplay;
• Tenbet (Costa Rica); and
• Onjoc (Panama).
The financial information required for investments in associates, other than Caliplay, have not been included here as from a Group perspective
the Directors do not consider them to have a material impact jointly or separately.
B. Other investments
Balance sheet
Listed investment – PhilWeb
Listed investment – Torque Esports Corp
Investment in Tenlot Guatemala
Investment in Tentech Costa Rica
Investment in Gameco
Total other investments
Profit and loss impact
Change of fair value of listed securities – PhilWeb
Change in fair value of listed securities – Torque Esports Corp
Total profit and loss impact
2022
€’m
1.1
0.3
4.4
2.1
1.3
9.2
2022
€’m
0.2
(0.5)
(0.3)
2021
€’m
0.8
0.8
4.4
2.1
—
8.1
2021
€’m
(0.4)
(1.2)
(1.6)
Listed investments
The Group has shares in listed securities in PhilWeb and Torque Esports Corp. The fair values of these equity shares are determined by reference
to published price quotations in an active market. For the year ended 31 December 2022, the fair value of PhilWeb increased by €0.2 million
(2021: decrease of €0.4 million). For the year ended 31 December 2022, the fair value of Torque Esports Corp decreased by €0.5 million
(2021: decrease of €1.2 million).
Investment in Tenlot Guatemala
In 2020, the Group entered into an agreement with Tenlot Guatemala, a member of the Tenlot Group. Tenlot Guatemala commenced its activity
in 2018 and it is currently growing its lottery business in Guatemala, expanding its distribution network and game offering.
The Group has acquired a 10% equity holding in Tenlot Guatemala for a total consideration of $5.0 million (€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 31 December 2022 is $5.0 million (€4.4 million) with no movement in fair value from the prior year.
In addition, the Group was granted a 10% equity holding in Super Sports S.A. at no additional cost. The Group also has an option to acquire an
additional 80% equity holding in Super Sports S.A. If the option is exercised, the Group would no longer provide certain services and, as such,
would no longer be entitled to the additional B2B services fee. The additional B2B services fee was €Nil for the year ended 31 December 2022
(2021: €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 31 December 2022 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 31 December 2022 is $2.5 million (€2.1 million) with no movement in fair value from the prior year.
Playtech plc Annual Report and Financial Statements 2022
191
Financial Statements
Note 20 – Investments and derivative financial assets continued
B. Other investments continued
Investment in Gameco
In 2021, the Group entered into a convertible loan agreement with GameCo LLC (“GameCo”), where it provided $4.0 million in the form of a debt
security with 8% interest (2021: €3.8 million). As at 31 December 2021 the receivable was included in loans receivable in Note 21. In December
2022, Gameco acquired Green Jade Games and subsequently, the Playtech debt was converted into equity shares, representing a 7.1% into the
newly formed group. Immediately prior to the conversion, the loan was impaired by €3.0 million and this has been recognised in the profit or loss
in the current year.
The 7.1% equity holding in the newly formed group is accounted at fair value through profit or loss under IFRS 9. The fair value of the equity
holding as at 31 December 2022 is €1.3 million.
C. Derivative financial assets
Balance sheet
Playtech M&A Call Option (Caliplay)
Wplay
Onjoc
Tenbet
LSports (Note 20A)
Total derivative financial assets
Statement of comprehensive income impact
Caliplay
Fair value change of Playtech M&A Call Option
Playtech Call Option
Foreign exchange movement to profit or loss
Wplay
Fair value change in Wplay
Foreign exchange movement recognised in other comprehensive income
Onjoc
Fair value change in Onjoc
Foreign exchange movement recognised in other comprehensive income
Tenbet
Fair value change in Tenbet
Foreign exchange movement recognised in other comprehensive income
Total comprehensive income impact
2022
€’m
524.0
93.5
8.6
8.9
1.4
636.4
2022
€’m
(13.3)
—
30.6
(9.4)
5.7
1.3
0.4
(3.2)
0.7
12.8
2021
€’m
506.7
97.2
6.9
11.4
—
622.2
2021
€’m
506.7
(16.6)
—
74.8
—
6.9
—
11.4
—
583.2
Caliplay
As already disclosed in section A of this note, the Playtech M&A Call Option is not currently exercisable and therefore in accordance with IAS 28,
paragraph 14 has been recognised as a derivative financial asset and fair valued under IFRS 9.
As at 31 December 2021, Caliplay was actively negotiating a merger with a US listed special purpose acquisition corporation (SPAC), which in
turn was expected to enter into a long-term commercial agreement with a leading media partner. As part of the transaction, the media partner
and certain of its shareholders were expected to invest a cash amount in the SPAC in exchange for shares and warrants issued by the SPAC,
which was expected to result in them together holding a material minority equity interest.
Further attempts were made to complete the SPAC transaction during the year, however as per the announcement made on 29 July 2022,
with capital market conditions having deteriorated significantly since the transaction was initially contemplated, the transaction was no longer
being pursued.
For this reason, a decision was taken to change the valuation methodology used as at 31 December 2022 for the Playtech M&A Call Option to
that of a DCF approach with a market exit multiple assumption, as opposed to 31 December 2021, where the Group has assessed the fair value
of the Playtech M&A Call Option based on the proposed term of the expected merger with the SPAC, including the transaction value.
As already mentioned in part A of Note 20 the Group is seeking a declaration from the English Courts to obtain clarification on a point of
disagreement between the parties in relation to the Caliente Call Option and in particular, whether Caliplay still holds this option which permits
it to redeem the additional B2B services fee element. Should it be declared that Caliplay still has the Caliente Call Option and Caliplay then
exercises said option, this would cancel both the Playtech M&A Call Option and the Playtech Call Option.
The Group believes the Caliente Call Option has expired and whilst Caliplay has not sought to exercise the option to date, Caliplay has made it
clear that it considers the option has not yet expired.
192 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 20 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Caliplay continued
In arriving at the fair value of the Playtech M&A Call Option, the Group has made a judgement that the Caliente Call Option has expired and
therefore no probability weighted scenarios have been modelled that include an assumption that the Caliente Call Option is exercisable. Should
the English Courts determine that the option is exercisable and Caliplay chooses to exercise the option, the amount payable by Caliplay to the
Group upon exercise would either be agreed between the parties or, failing which, determined by an independent investment bank valuing the
Group’s remaining entitlement to receive the additional B2B services fee until 31 December 2034. There is therefore the potential that, should the
Caliente Call Option be exercisable and then subsequently exercised, the proceeds received by the Group may be materially different (positive
or adverse) to the fair value of the Playtech M&A Call Option recorded as at 31 December 2022.
Valuation
The Group has assessed the fair value of the Playtech M&A Option of the derivative financial asset as at 31 December 2022 using a discounted
cash flow (DCF) approach with a market exit multiple assumption. The Group used a discount rate of 16% reflecting the cash flow risks given the
high growth rates in place, as well as a discount for illiquidity and control until the expected Group exit date. The Group also made assumptions
on the probability of a possible transaction that may be completed on a number of exit date scenarios over a four-year period, until December
2026. The Group used a compound annual growth rate of 17.2% over the forecasted cash flow period, an average Adjusted EBITDA margin of
26.3% and an exit multiple of 9.6x. Due to the uncertainty as to how the exercise of the Playtech M&A Call Option may occur and the potential
for the shares held to not be immediately realisable, the Group included an additional discount for lack of marketability (DLOM) for two years
of 13.8%. 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.
As at 31 December 2022, the fair value of the Playtech M&A Call Option was $560.6 million (2021: $574.7 million) which converted to €524.0 million
(2021: €506.7 million). The year-on-year movement of €17.3 million recognised in the profit or loss is attributable to the favourable movement in
the USD to EUR foreign exchange rate of €30.6 million, offset by €13.3 million unfavourable movement in the fair value arising from the change
in a number of variables including exit dates and loss of transaction synergies which impacted cash flows that were only partly offset by the
increase in the shareholding as discussed below.
As at 31 December 2021 the fair value of the option in Caliplay was determined using a potential transaction price where, due to incoming
shareholders, Playtech’s share in Caliplay was being diluted down to 36%. As at 31 December 2022, a discounted cash flow valuation method
is used with a dilution in shareholding down only to 45.8% reflecting the expected rights to Caliplay shares to be allocated to a service provider
under its services agreement with the Group. These rights were reduced following the exercise of a redemption option post year end as disclosed
in Note 40, noting that the Group had assumed this option would be exercised for the purposes of the valuation performed at 31 December 2022.
Despite the change in valuation approach, the Group considers it reasonable that the value of the Playtech M&A Call Option is broadly
unchanged given the continued strong operational results of Caliplay for 2022.
Sensitivity analysis
The assumptions and judgements made in the valuation of the derivative financial asset as at 31 December 2022 include the following
sensitivities, noting that factors and circumstances may arise that are outside the Group’s control which could impact the option value:
• A different discount rate within the range of 14% to 18% will result in a fair value of the derivative financial asset in the range of €484.2 million –
€568.3 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €494.5 million –
€553.3 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €464.6 million –
€583.3 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €487.0 million –
€561.8 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €450.5 million –
€601.0 million.
• A 1.0 fluctuation on the market exit multiple will result in a fair value of the derivative financial asset within the range of €473.9 million –
€573.9 million.
•
If the 13.8% DLOM applied for two-year period post exercise of the Playtech M&A option was removed (i.e. in the event that an M&A transaction
included the acquisition of Playtech’s shares immediately post exercise) the fair value of the derivative financial asset would increase to €607.6 million.
Conversely, if we double the applied DLOM to 27.6% the fair value of the derivative financial asset would decrease to €440.2 million.
Wplay
In August 2019, Playtech entered into a structured agreement with Aquila Global Group SAS (“Wplay”), which has a license to operate online
gaming activities in Colombia. Under the agreement the Group provides Wplay its technology products, where it receives standard operator
revenue and additional B2B services fee as per Note 5. The Group has no shareholding in Wplay.
Playtech has a call option to acquire a 49.9% equity holding in the Wplay business. As at 31 December 2021 this option was exercisable in August
2022, however during 2022, the parties agreed to defer the Group’s ability to exercise this option to August 2023. 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 for the year ended 31 December 2022 (2021: €Nil).
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. The Group
had contingent commitments totalling $6.0 million, of which $5.0 million was paid in June 2021 and $1.0 million was paid in October 2022.
Playtech plc Annual Report and Financial Statements 2022
193
Financial Statements Note 20 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Wplay continued
Assessment of control and significant influence
The Group assessed whether it holds power over the investee (in accordance with IFRS 10, paragraph 7) with the following considerations:
• Playtech does not have the ability to direct Wplay’s activities as it has no voting representation on the executive committee or members of
the executive committee.
• Whilst they are not members of the executive committee, Playtech has the ability to appoint and change both the COO and CMO who form
part of the management team (albeit this right has never been exercised). The COO and the CMO are part of the wider management team
but would not be able to control the relevant activities of Wplay.
•
If the option is exercised it would result in Playtech acquiring 49.9% of the voting rights of the operating entity and therefore would not
result in having control. Furthermore, as at 31 December 2022 the option is not exercisable and therefore can be disregarded in the
assessment of power.
Per the above assessment Playtech does not hold power over the investee and as such does not have control.
With regards to the assessment of significant influence, the following facts were considered:
• Playtech has the right to appoint and remove the COO and CMO which is a potential indicator of significant influence given their relative
positions and involvement in the day-to-day operations of Wplay.
• The standard operator revenue is not considered to give rise to significant influence. However, when combined with the additional B2B
services fee, this is an indicator of significant influence.
• The Group provides additional services to Wplay which Wplay requires to assist it in successfully running its operations, which could be
considered essential technical information.
The Group therefore has significant influence under IAS 28, paragraph 6 over Wplay. However, as the option is not currently exercisable, we have
an investment in associate but with no access to profits. As such the option is fair valued as per paragraph 14 of IAS 28 and shown as a derivative
financial asset in accordance with IFRS 9.
The Group has given an interest-bearing loan of $1.7 million (€1.6 million) to Wplay, which is due for repayment in December 2023 and is included
in loans receivable from related parties (refer to Note 36).
Valuation
The fair value of the option at 31 December 2022 has been estimated using a DCF approach with a market exit multiple assumption. The Group
used a discount rate of 25% (2021: 23%) reflecting the cash flow risks given the high growth rates in place and the relative early stages of the
business, as well as a discount for illiquidity and control until the expected Playtech exit date of December 2026 (2021: expected exit date of
December 2026). The Group used a compound annual growth rate of 24.7% (2021: 27.2%) over the forecasted cash flow period, an average
Adjusted EBITDA margin of 20.6% (2021: 17.5%) and an exit multiple of 9.6x (2021: 9.8x). 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 31 December 2022, the fair value of the Wplay derivative financial asset is €93.5 million. The difference of €3.7 million between the fair
value at 31 December 2021 of €97.2 million and the fair value at 31 December 2022 has been recognised as follows:
a.
b.
€9.4 million derived from the fair value decrease of the derivative call option calculated using the DCF model in the profit or loss for the year
ended 31 December 2022.
€5.7 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 year ended 31 December 2022.
194 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 20 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Wplay continued
Sensitivity analysis
The assumptions and judgements made in the valuation of the derivative financial asset as at 31 December 2022 include the following
sensitivities, noting that factors and circumstances may arise that are outside the Group’s control which could impact the option value:
• A different discount rate within the range of 20% to 30% will result in a fair value of the derivative financial asset in the range of €79.5 million –
€111.0 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €89.0 million –
€98.1 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €84.4 million –
€102.6 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €90.1 million –
€97.1 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €86.7 million –
€100.8 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 €85.8 million –
€101.2 million.
•
If the expected Playtech exit date fluctuates by one year later or earlier, the fair value of the derivative financial asset will change to
€87.8 million and €99.5 million respectively.
Onjoc
In June 2020, Playtech entered into a framework agreement with ONJOC CORP. (“Onjoc”), which holds a license to operate online sports
betting, gaming and gambling activities in Panama. The Group has no equity holding in Onjoc but has an option to acquire 50%. Under the
agreement the Group provides Onjoc its technology products, where it receives standard operator revenue and additional B2B services fee
as per Note 5. 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 year ended 31 December 2022 (2021: €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 performed an analysis for Onjoc to assess whether it holds power over Onjoc (in accordance with IFRS 10, paragraph 7)
with the following considerations:
• Playtech can propose an independent member to the board of directors, who has to be independent to both Playtech and Onjoc,
and as such does not have the ability to direct Onjoc’s activities as it has no voting representation on the board;
• Playtech has the right to appoint and remove the COO, CTO and CMO, which although would form part of the wider management team,
would not be able to control the relevant activities of Onjoc by themselves; and
•
if the option is exercised it would result in Playtech acquiring 50% of the voting rights of the operating entity and therefore would not
result in having control. Furthermore, as at 31 December 2022 the option is not exercisable and therefore can be disregarded in the
assessment of power.
Per the above assessment Playtech does not hold power over the investee and as such does not have control.
With regards to the assessment of significant influence, the following facts were considered:
• Playtech can propose an independent member to the board of directors and has the right to appoint and remove the COO, CTO and CMO
which are potential indicators of significant influence given their relative positions and the involvement in day-to-day operations of Onjoc;
• the standard operator revenue is not considered to give rise to significant influence. However, when combined with the additional B2B
services fee, this is an indicator of significant influence; and
• the Group provides additional services to Onjoc which Onjoc requires to assist it in successfully running its operations which could be
considered essential technical information.
The Group therefore has significant influence under IAS 28, paragraph 6 over Onjoc. However, as the option is not currently exercisable, we have
an investment in associate but with no access to profits. As such the option is fair valued as per paragraph 14 of IAS 28 and shown as a derivative
financial asset in accordance with IFRS 9.
The Group has given an interest-bearing loan to Onjoc of €1.8 million (2021: €1.1 million) which is due for repayment in October 2025 and is
included in loans receivable from related parties (refer to Note 36).
Playtech plc Annual Report and Financial Statements 2022
195
Financial Statements Note 20 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Onjoc continued
Valuation
The fair value of the option at 31 December 2022 has been estimated using a DCF approach with a market exit multiple assumption. The Group
used a discount rate of 33% (2021: 31%) reflecting the cash flow risk given the high growth rates in place and the early stages of the business, as
well as a discount for illiquidity and control until the expected Playtech exit date of December 2027 (2021: expected exit date of December 2027).
The Group used a compound annual growth rate of 60.1% (2021: 89.3%) over the forecasted cash flow period and an average Adjusted EBITDA
margin of 20.4% (2021: 3.7%). 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 31 December 2022, the fair value of the Onjoc derivative financial asset is €8.6 million. The difference of €1.7 million between the fair value
at 31 December 2021 of €6.9 million and the fair value at 31 December 2022 has been recognised as follows:
a.
b.
€1.3 million derived from the fair value increase of the derivative call option calculated using the DCF model in the profit or loss in the year
ended 31 December 2022.
€0.4 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 year ended 31 December 2022.
Sensitivity analysis
The assumptions and judgements made in the valuation of the derivative financial asset as at 31 December 2022 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 €7.1 million – €10.5 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €8.1 million – €9.1 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €7.7 million – €9.5 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €7.9 million – €9.3 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €7.3 million – €10.1 million.
• A 1.0 fluctuation on the market exit multiple will result in a fair value of the derivative financial asset within the range of €7.6 million – €9.7 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 year ended 31 December 2022 (2021: €Nil). In H1 2022, the Group signed
an amendment to the Tenbet agreement in which the option can be exercised at any time from the end of 35 months (previously 18 months) of
Tenbet going live. The call option to acquire 81% equity holding in Tenbet is exercisable from July 2023 (previously February 2022).
Under the existing agreements, the Group has provided Tenbet with a credit facility of €2.7 million out of which €2.1 million had been drawn down
as at 31 December 2022 (2021: €1.1 million).
Assessment of control and significant influence
The Group assessed whether it holds power over Tenbet (in accordance with IFRS 10, paragraph 7) with the following considerations:
• Playtech does not have the ability to direct Tenbet’s activities as it has no voting representation on the Board of Directors (or equivalent)
or people in managerial positions;
• Playtech has neither the ability to appoint, or change any members of the Board of Tenbet; and
• as at 31 December 2022 the option is not exercisable and therefore can be disregarded in the assessment of power.
Per the above assessment, Playtech does not hold power over the investee and as such does not have control.
With regards to the assessment of significant influence, the standard operator revenue alone is not considered to give rise to significant
influence. However, when combined with the additional B2B services fee, this is an indicator of significant influence. Furthermore, the Group
provides additional services to Tenbet which Tenbet requires to assist it in successfully running its operations that could be considered essential
technical information. Playtech therefore has significant influence under IAS 28, paragraph 6 over Tenbet. However, as the option is not currently
exercisable, we have an investment in associate but with no access to profits. As such the option is fair valued as per paragraph 14 of IAS 28 and
shown as a derivative financial asset in accordance with IFRS 9.
196 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 20 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Tenbet Costa Rica continued
Valuation
The fair value of the option at 31 December 2022 has been estimated using a DCF approach with a market exit multiple assumption. The Group
used a discount rate of 35% (2021: 33%) reflecting the cash flow risk given the high growth rates in place and the early stages of the business, as
well as a discount for illiquidity and control until the expected Playtech exit date of December 2027 (2021: expected exit date of December 2027).
The Group used a compound annual growth rate of 135% (2021: 64.2%) over the forecasted cash flow period and an average Adjusted EBITDA
margin within the range of – 335% to 31% in years 1-5 with an average of -59.8% (2021: average of -10.1%). 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 31 December 2022, the fair value of the Tenbet derivative financial asset is €8.9 million. The difference of €2.5 million between the fair value
at 31 December 2021 of €11.4 million and the fair value at 31 December 2022 has been recognised as follows:
a.
b.
€3.2 million derived from the fair value decrease of the derivative call option calculated using the DCF model in the profit or loss in the year
ended 31 December 2022.
€0.7 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 year ended 31 December 2022.
Sensitivity analysis
The assumptions and judgements made in the valuation of the derivative financial asset as at 31 December 2022 include the following
sensitivities, noting that factors and circumstances may arise that are outside the Group’s control which could impact the option value:
• A different discount rate within the range of 30% to 40% will result in a fair value of the derivative financial asset in the range of €7.2 million – €11.0 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €8.5 million – €9.3 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €8.0 million – €9.8 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €7.9 million – €10.0 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €6.9 million – €11.2 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 €7.7 million – €10.2 million.
Note 21 – Other non-current assets
Security deposits
Guarantee for gaming licences
Prepaid costs relating to Sun Bingo contract
Loans receivable (Net of ECL)
Loans receivable from related parties (Net of ECL) (Note 36)
Other receivables
Note 22 – Trade receivables
Trade receivables
Related parties (Note 36)
Trade receivables – net
Split to:
Non-current assets
Current assets
2022
€’m
3.3
2.2
63.4
1.7
27.9
11.1
2021
€’m
3.3
2.6
71.7
8.1
9.5
9.2
109.6
104.4
2022
€’m
144.5
20.5
165.0
1.1
163.9
165.0
2021
€’m
168.6
16.5
185.1
6.6
178.5
185.1
Playtech plc Annual Report and Financial Statements 2022
197
Financial Statements
Note 23 – Other receivables
Prepaid expenses
VAT and other taxes
Security deposits for regulators
Prepaid costs relating to Sun Bingo contract
Receivable for legal proceedings and disputes1
Loans receivable2 (Net of ECL)
Loans receivable from related parties (Net of ECL) (Note 36)
Other receivables
2022
€’m
23.4
13.6
24.2
3.6
16.4
13.0
3.3
10.1
107.6
2021
€’m
25.9
14.1
13.1
4.3
16.4
2.1
2.4
8.8
87.1
1
2
Receivable for legal proceedings and disputes relates to funds held in escrow, in relation to a historical and ongoing legal matter. The corresponding liability is included under gaming and other taxes.
The funds will be released when the case is finally settled, in accordance with the escrow agreement.
Included in loans receivable above, is a convertible debenture of C$12.25 million (€8.3 million net of ECL) issued to NorthStar Gaming Inc in December 2022 that will convert into equity and warrants
in connection with NorthStar’s proposed reverse takeover (the “RTO”) of Baden Resources Inc. The fair value of the convertible debenture was assessed as being materially in line with its face value
at 31 December 2022. Refer to Note 40.
Note 24 – Cash and cash equivalents
Cash and cash equivalents for the purposes of the statement of cash flows comprises:
Continuing operations
Cash at bank
Deposits
Less: expected credit loss (Note 38A)
Treated as held for sale
Cash at bank
Cash at brokers
Deposits
Cash and cash equivalents in the statement of cash flows
Less: expected credit loss (Note 38A)
2022
€’m
426.8
0.1
426.9
(0.4)
426.5
—
—
—
—
426.9
(0.4)
426.5
2021
€’m
572.4
3.6
576.0
(0.6)
575.4
71.2
293.4
1.5
366.1
942.1
(0.6)
941.5
Out of the total cash at bank, an amount of €6.8 million were held by payment processors as at 31 December 2022 (2021: €6.9 million).
The Group holds cash balances on behalf of operators in respect of their jackpot games and poker and casino operations, as well as client funds
with respect to B2C. Furthermore, and up to the point of the Financial segment disposal, the Group held CFD and client deposits in relation to
liquidity and clearing activities. All of these are included in current liabilities.
Continuing operations
Funds attributed to jackpots
Security deposits
Players’ balances
Included in liabilities held for sale
Client deposits
Client funds
198 Playtech plc Annual Report and Financial Statements 2022
2022
€’m
84.7
29.6
39.8
154.1
—
—
—
2021
€’m
82.2
28.5
30.4
141.1
138.5
170.3
308.8
Notes to the financial statements continuedFinancial Statements
Note 25 – Assets held for sale
Assets
A. Property, plant and equipment
B. Casual CGU
C. Financials CGU
D. Investment in associates
2022
€’m
19.6
—
—
—
19.6
2021
€’m
20.0
—
487.4
—
507.4
A.
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.
At the date of the transfer to assets held for sale, an impairment review was performed, where the carrying amount was compared to the fair
value less expected disposal costs. The carrying value of the land was higher than the fair value less expected selling costs and therefore an
impairment of €12.3 million was recognised in the profit or loss in the year ended 31 December 2021. In addition, €1.8 million of deferred tax
liability relating to the land was recognised in the profit or loss in the prior year. It was the Group’s decision to sell the asset, and subsequently
the prospective buyer was only interested in the land and not the buildings, which led to this impairment.
The sale has been finalised but the disposal is expected to complete in 2024 with the movement of the trot track from La Maura area to
San Siro (previously it was expected that the sale would complete during 2022).
B.
Following the decision made by the Group in 2019 to dispose the Casual and Social Gaming businesses, the value of the divisions were
classified as held for sale and the results were included in discontinued operations.
On 11 January 2021, the Group entered into an agreement for the disposal of “YoYo”, also included in this division, for a total consideration of
$9.5 million. As a result of this transaction, the Group realised a profit of €7.6 million in the profit or loss for the year ended 31 December 2021,
included within the total profit from discontinued operations (refer to Note 8).
The Social and Casual Gaming CGU is now fully disposed.
C.
Following the decision made by the Board of Directors in 2020 to dispose of the Financial segment, the division was classified as held for
sale and its results included in discontinued operations.
In September 2021, the Group entered into an agreement to sell this division for a cash consideration of $250.0 million, with the final
consideration being subject to a completion accounts adjustment of up to $25.0 million in either direction, to be determined by the financial
performance of the Financial segment from 1 January 2021 to the completion date.
The disposal was completed in July 2022, with cash consideration after this adjustment of $228.1 million (€223.9 million).
At 31 December 2020 an impairment charge of €221.2 million was recognised against this CGU as a result of comparing its carrying value to
expected proceeds from the disposal, less expected costs to sell. Following a review of the net assets of the unit at 31 December 2021, when
compared to the expected proceeds, €2.0 million of the previously recognised impairment was reversed. The impairment loss allocated
against goodwill cannot be reversed.
Playtech plc Annual Report and Financial Statements 2022
199
Financial Statements
Note 25 – Assets held for sale continued
The profit on disposal of Financial segment was determined as follows:
Cash consideration received
Transaction costs paid
Cash disposed off
Net cash outflow on disposal of Financial segment
Net assets disposed (other than cash):
Property, plant and equipment
Right of use assets
Intangible assets
Trade and other receivables
Deferred tax liability
Trade payables and other payables
Client deposits
Client funds
Income tax payable
Lease liability
Net liability position on disposal of Financial segment
Net cash outflow
Net liability position disposed
Recycling of foreign exchange reserve related to the foreign discontinued operations
Profit on disposal
€’m
223.9
(1.6)
(392.1)
(169.8)
(4.3)
(6.3)
(98.0)
(13.9)
7.0
24.8
144.5
147.1
2.7
4.5
208.1
(169.8)
208.1
(23.2)
15.1
D.
In 2020, the Board of Directors made a decision to dispose of its shareholding in two associates and as such their value of €2.2 million
was transferred to assets held for sale. During 2021, the Group entered into an agreement for the disposal of these associates for a total
consideration of €2.2 million.
Note 26 – Shareholders’ equity
A. Share capital
Share capital is comprised of no par value shares as follows:
Authorised1
Issued and paid up
1 The Company has no authorised share capital, but it is authorised to issue up to 1,000,000,000 shares of no par value.
The table below shows the movement of the shares:
2022
Number
of shares
2021
Number
of shares
N/A
309,294,243
N/A
309,294,243
At 1 January 2021
Transfer to EBT
Exercise of options
At 31 December 2021/1 January 2022
Exercise of options
Shares in issue/
circulation
Number of shares
297,603,815
—
1,640,511
299,244,326
1,743,990
Treasury shares
9,965,889
(7,028,339)
—
2,937,550
—
Shares held by
2014 EBT
Shares held by
2021 EBT
Total
1,724,539
—
(1,640,511)
84,028
(84,028)
— 309,294,243
—
—
7,028,339
—
7,028,339
(1,659,962)
309,294,243
—
At 31 December 2022
300,988,316
2,937,550
—
5,368,377 309,294,243
200 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 26 – Shareholders’ equity continued
B. Employee Benefit Trust
2014 EBT
In 2014, the Group established an Employee Benefit Trust (2014 EBT) by acquiring 5,517,241 shares for a total of €48.5 million. During the year
ended 31 December 2022, 84,028 shares (2021: 1,640,511 shares) were issued at a cost of €0.6 million (2021: €13.9 million).
2021 EBT
In 2021 the Company transferred 7,028,339 shares held by the Company in treasury to the Employee Benefit Trust (2021 EBT) for a total
of €22.6 million. During the year ended 31 December 2022, 1,659,962 shares (2021: Nil) were issued at a cost of €5.4 million (2021: €Nil).
As at 31 December 2022, a balance of 5,368,377 shares (2021: 7,028,339 shares) remains in the 2021 EBT with a cost of €17.2 million
(2021: €22.6 million).
C. Share options exercised
During the year 1,794,438 (2021: 1,873,307) share options were exercised, of which 50,448 were cash settled (2021: 232,796).
D. Distribution of dividends
During 2022 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
Employee Benefit Trust
Put/call options reserve
Foreign exchange reserve
Employee termination indemnities
Non-controlling interest
Retained earnings
Share premium (i.e. amount subscribed for share capital in excess of nominal value)
Cost of own shares held in treasury by the trust
Fair value of put/call options as part of business acquisition
Gains/losses arising on retranslating the net assets of overseas operations
Gains/losses arising from the actuarial remeasurement of the employee termination indemnities
The portion of equity ownership in a subsidiary not attributable to the owners of the Company
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income
Note 27 – Loans and borrowings
The credit facility of the Group is a revolving credit facility (RCF) which has been restructured during the year. The facility has been reduced
from €317.0 million 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 rates (replacing Euro Libor and Libor rates) based on the currency of each withdrawal. Following the announcement of
the UK Financial Conduct Authority (FCA) as to the future cessation or loss of representativeness of the 35 Libor benchmark, effective from
1 January 2022, Libor rates were replaced with the SONIA daily rate (Sterling overnight index average). As at the reporting date the credit facility
drawn amounted to €Nil (2021: €167.1 million).
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 3.5:1 (2021: 3:1)
•
Interest cover: Adjusted EBITDA/Interest 4:1 (2021: 4:1)
As at 31 December 2022 and 2021 the Group met these financial covenants.
Playtech plc Annual Report and Financial Statements 2022
201
Financial Statements Note 28 – Bonds
At 1 January 2021
Release of capitalised expenses
At 31 December 2021/1 January 2022
Repayment of bonds
Release of capitalised expenses
At 31 December 2022
Split to:
Non-current
Current
2018 Bond
€’m
2019 Bond
€’m
526.3
1.3
527.6
(330.0)
2.0
199.6
346.8
0.6
347.4
—
0.6
348.0
2022
€’m
348.0
199.6
547.6
Total
€’m
873.1
1.9
875.0
(330.0)
2.6
547.6
2021
€’m
875.0
—
875.0
Bonds
(a) 2018 Bond
On 12 October 2018, the Group issued €530 million of senior secured notes (the “2018 Bond”) maturing in October 2023. During the year, the
Group partially repaid the 2018 Bond by €330 million. 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.
The fair value of the Bond as Level 1 at 31 December 2022 was €198.8 million (2021: €536.1 million).
(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.
The fair value of the Bond as Level 1 at 31 December 2022 was €331.6 million (2021: €358.3 million).
As at 31 December 2022 and 2021 the Group met the required interest cover financial covenant of 2:1 Adjusted EBITDA/interest ratio,
for the combined 2018 and 2019 Bonds.
Note 29 – 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 31 December 2022 are shown below:
Balance at 1 January 2022
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Balance at 31 December 2022
Legal and
regulatory
€’m
Contractual
€’m
6.9
1.0
(0.1)
(0.5)
7.3
6.7
—
(0.5)
(2.0)
4.2
Other
€’m
3.1
0.9
(0.4)
(1.2)
2.4
Total
€’m
16.7
1.9
(1.0)
(3.7)
13.9
202 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 29 – Provisions for risks and charges, litigation and contingent liabilities continued
2021
Non-current
Current
2022
Non-current
Current
Legal and
regulatory
€’m
Contractual
€’m
Other
€’m
6.9
—
6.9
7.3
—
7.3
3.5
3.2
6.7
0.3
3.9
4.2
3.1
—
3.1
2.4
—
2.4
Total
€’m
13.5
3.2
16.7
10.0
3.9
13.9
Provision for legal and regulatory issues
The Group is subject to proceedings and potential claims regarding complex legal matters (including those related to previous acquisitions),
which are subject to a different degree of uncertainty. Provisions are held for various legal and regulatory issues that relate to matters arising in
the normal course of business, including in particular various disputes that arose in relation to the operation of the various licenses held by the
Group’s subsidiary Snaitech. The uncertainty is due to complex legislative and licensing frameworks in the various territories in which the Group
operates. The Group also operates in certain jurisdictions where legal and regulatory matters can take considerable time for the required local
processes to be completed and the matters to be resolved.
Contractual claims
The Group is subject to historic claims relating to contractual matters that arise with customers in the normal course of business. The Group
believes they have a robust defence to the claims raised and has provided for the likely settlement where an outflow of funds is probable. The
uncertainty relates to complex contractual dealings with a wide range of customers in various jurisdictions, and because as noted above, the
Group operates in certain jurisdictions where contractual disputes can take considerable time to be resolved in the local legal system.
Given the uncertainties inherent, it is difficult to predict with certainty the outlay (or the timing thereof) which will derive from these matters. It is
therefore possible that the value of the provisions may vary further to future developments. The Group monitors the status of these matters and
consults with its advisers and experts on legal and tax-related matters in arriving at the provisions recorded. The provisions included represent
the Directors’ best estimate of the potential outlay and none of the matters provided for are individually material to the financial statements.
Accounting for uncertain tax positions
The Group is subject to various forms of tax in a number of jurisdictions. Given the nature of the industry and the jurisdictions within which the
Group operates, the tax, legal and regulatory regimes are continuously changing and subject to differing interpretations. As such, the Group
is exposed to a small number of uncertain tax positions and open audits/enquiries. Judgement is applied in order to adequately provide for
uncertain tax positions where it is believed that it is more likely than not that an economic outflow will arise. The Group has provided for uncertain
tax positions which meet the recognition threshold and these positions are included within tax liabilities. There is a risk that additional liabilities
could arise. Given the uncertainty and the complexity of application of international tax in the sector, it is not feasible to accurately quantify any
possible range of liability or exposure, and this has therefore not been disclosed.
Note 30 – Contingent consideration and redemption liability
Non-current contingent consideration and redemption liability consists of:
Non-current redemption liability
Acquisition of Statscore SP Z.O.O.
Non-current contingent consideration
Acquisition of Aus GMTC PTY Ltd
Others
Total non-current contingent consideration and redemption liability
Current contingent consideration consists of:
Acquisition of Eyecon Limited
Amount payable to Aquila Global Group SAS (“Wplay”) (Note 20)
Other acquisitions
Total current contingent consideration
Total contingent consideration and redemption liability
2022
€’m
—
2.1
0.2
2.3
—
—
0.6
0.6
2.9
2021
€’m
6.0
—
—
6.0
3.6
0.8
0.6
5.0
11.0
Playtech plc Annual Report and Financial Statements 2022
203
Financial Statements
Note 30 – Contingent consideration and redemption liability continued
The maximum contingent consideration and redemption liability payable is as follows:
Acquisition of Eyecon Limited
Acquisition of HPYBET Austria GmbH
Interest in Aquila Global Group SAS (“Wplay”)
Acquisition of Statscore SP Z.O.O.
Acquisition of Aus GMTC PTY Ltd
Other acquisitions
Note 31 – Trade payables
Suppliers
Customer liabilities
Note 32 – Deferred tax
The movement on the deferred tax is as shown below:
Balance at 1 January
Charge to profit or loss (Note 14)
Exchange differences
At 31 December
Split as:
Deferred tax liability
Deferred tax asset
2022
€’m
—
—
—
—
46.7
0.8
47.5
2022
€’m
47.0
14.2
61.2
2022
€’m
14.0
(26.3)
—
(12.3)
2022
€’m
(124.8)
112.5
(12.3)
2021
€’m
3.6
15.0
0.9
15.0
—
6.8
41.3
2021
€’m
33.5
7.8
41.3
2021
€’m
(82.5)
96.3
0.2
14.0
2021
€’m
(88.9)
102.9
14.0
Deferred tax assets and liabilities are offset only when there is a legally enforceable right of offset, in accordance with IAS 12.
As at 31 December 2022, 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 Note 14 for the assessment performed on the recognition of deferred tax in the period.
Details of the deferred tax outstanding as at 31 December 2022 and 2021 are as follows:
Deferred tax recognised on Group restructuring
Tax losses
Other temporary and deductible differences
Total
Details of the deferred tax, amounts recognised in profit or loss are as follows:
Accelerated capital allowances
Employee pension liabilities
Other temporary and deductible differences
Leases
Tax losses
Total
204 Playtech plc Annual Report and Financial Statements 2022
2022
€’m
56.8
75.9
(145.0)
(12.3)
2022
€’m
(1.3)
(0.3)
(26.6)
(0.1)
2.0
(26.3)
2021
€’m
63.6
74.1
(123.7)
14.0
2021
€’m
76.8
0.1
(15.5)
—
34.9
96.3
Notes to the financial statements continuedFinancial Statements
Note 33 – Other payables
Non-current liabilities
Payroll and related expenses
Other
Current liabilities
Payroll and related expenses
Accrued expenses
VAT payable
Interest payable
Other payables
Note 34 – Gaming and other taxes payable
Gaming tax
Other
2022
€’m
23.9
1.0
24.9
96.5
48.2
3.0
7.4
14.0
169.1
2022
€’m
112.5
0.3
112.8
2021
€’m
10.8
2.0
12.8
81.7
67.4
3.8
10.4
2.9
166.2
2021
€’m
105.3
0.1
105.4
Note 35 – Acquisitions during the year
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 (US$3.0 million), with an additional consideration (capped at US$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.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill, are as follows:
Net book value of liabilities acquired
Fair value of IP Technology acquired
Total net assets acquired
Fair value of consideration
Goodwill arising on acquisition
Cash consideration
Non-current contingent consideration
Fair value of consideration
Adjustments to fair value include the following:
IP Technology
Fair value of the
identifiable assets,
liabilities and
goodwill acquired
€’m
(0.5)
2.9
2.4
6.8
4.4
Fair value of
consideration paid
and payable
€’m
2.9
3.9
6.8
Amount
€’m
2.9
Amortisation
%
33.3
The main factor leading to the recognition of goodwill is the future games to be developed by the studio and the assembled work force who have
significant experience in the field of game design and development. The resulting goodwill is not deductible for tax purposes. The acquisition
represents its own CGU and in accordance with IAS 36 the Group will regularly monitor the carrying value of this.
Playtech plc Annual Report and Financial Statements 2022
205
Financial Statements
Note 35 – Acquisitions during the year continued
Management has used the replacement cost methodology in determining the fair value of the IP Technology acquired.
The future consideration is €3.9 million, discounted at 35% based on Damodaran’s Target Rates of Return – Stage in Life Cycle, 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 Note 30.
Management has not disclosed Aus GMTC’s contribution to the Group profit since the acquisition nor the impact the acquisition would have
had on the Group’s revenue and profits if it had occurred on 1 January 2022, because the amounts are negligible.
Note 36 – 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 year, Group companies entered into the following transactions with related parties which are not members of the Group:
Revenue
Investments in associates
Interest income
Investments in associates
2022
€’m
132.7
0.8
2021
€’m
95.0
0.1
The revenue from investments in associates includes income from Caliplay, Galera, Wplay, Onjoc and Tenbet. The interest income relates to the
same companies except Caliplay.
The following amounts were outstanding at the reporting date:
Trade receivables (Note 22)
Associates
Loans and interest receivable – current (Note 23)
Associates
Loans and interest receivable – non-current (Note 21)
Associates
2022
€’m
20.5
3.4
29.0
2021
€’m
16.5
2.4
9.5
The loans and interest receivables above do not include the expected credit losses. For the year ended 31 December 2022, the Group
recognised a provision for expected credit losses of €0.1 million relating to amounts owed by related parties in less than one year (2021: €Nil)
and €1.1 million for more than one year.
The loans due from related parties are further disclosed in Note 20.
Key management personnel compensation which includes the Board members (Executive and Non-executive Directors) and senior
management personnel comprised the following:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2022
€’m
13.6
0.1
1.2
2.2
17.1
2021
€’m
14.2
0.1
0.1
4.3
18.7
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 €5.9 million
(2021: €3.0 million).
206 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 37– Subsidiaries
Details of the Group’s principal subsidiaries as at the end of the year are set out below:
Name
Country of incorporation
Proportion of voting
rights and ordinary
share capital held
Nature of business
Playtech Holdings Limited
Isle of Man
100%
Playtech Software Limited
United Kingdom
100%
Video B Holding Limited
British Virgin Islands
100%
Playtech Services (Cyprus) Limited
Cyprus
VB (Video) Cyprus Limited
Cyprus
Virtue Fusion (Alderney) Limited
Alderney
Intelligent Gaming Systems Limited
United Kingdom
VF 2011 Limited
PT Turnkey Services Limited
Alderney
Isle of Man
PT Entertenimiento Online EAD
Bulgaria
PT Marketing Services Limited
British Virgin Islands
PT Operational Services Limited
British Virgin Islands
S-Tech Limited
British Virgin Islands
and branch office in the
Philippines
PT Network Management Limited
British Virgin Islands
Videobet Interactive Sweden AB
Sweden
V.B. Video (Italia) S.r.l.
Quickspin AB
Best Gaming Technology GmbH
Playtech BGT Sports Limited
Italy
Sweden
Austria
Cyprus
ECM Systems Ltd
Eyecon Limited
Rarestone Gaming PTY Ltd
HPYBET Austria GmbH
Snaitech SPA
OU Playtech (Estonia)
Techplay Marketing Limited
OU Videobet
United Kingdom
Alderney
Australia
Austria
Italy
Estonia
Israel
Estonia
Playtech Bulgaria
PTVB Management Limited
Bulgaria
Isle of Man
Techplay S.A. Software Limited
Israel
CSMS Limited
Bulgaria
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Main trading company of the Group up to December 2020, owns the
intellectual property rights and licenses the software to customers.
From January 2021 onwards, the principal activity is the holding of
investment in subsidiaries
Main trading company from 2021 onwards, owns the intellectual
property rights and licenses the software to customers
Trading company for the Videobet software, owns the intellectual
property rights of Videobet and licenses it to customers. From
January 2021 onwards, the principal activity is the holding of
investment in subsidiaries
Activates the iPoker Network in regulated markets. Owns the
intellectual property of the GTS, Ash and Geneity businesses
Trading company for the Videobet product to Romanian companies
Online bingo and casino software provider
Casino management systems to land-based businesses
Holds licence in Alderney for online gaming and Bingo B2C operations
Holding company of the Turnkey Services group
Poker and Bingo network for Spain
Marketing services to online gaming operators
Operational and hosting services to online gaming operators
Previously, live game services to Asia. Currently a dormant company
Manages the iPoker Network
Trading company for the Aristocrat Lotteries VLTs
Trading company for the Aristocrat Lotteries VLTs
Owns video slots intellectual property
Trading company for sports betting
Owns sports betting intellectual property solutions and trading
company for sports betting
Owns bingo software intellectual property and bingo hardware
Develops and provides online gaming slots
Development company
Operating shops in Austria
Italian retail betting market and gaming machine market
Designs, develops and manufactures online software
Marketing and advertising
Develops software for fixed odds betting terminals and casino
machines (as opposed to online software)
Designs, develops and manufactures online software
Management company
Develops online software
Consulting and online technical support, data mining processing
and advertising services to Group companies
Playtech plc Annual Report and Financial Statements 2022
207
Financial Statements Note 37– Subsidiaries continued
Name
Country of incorporation
Proportion of voting
rights and ordinary
share capital held
Nature of business
Mobenga AB Limited
PokerStrategy Ltd
Snai Rete Italia S.r.l.
PT Services UA LTD
Trinity Bet Operations Ltd
Euro live Technologies SIA
Sweden
Gibraltar
Italy
Ukraine
Malta
Latvia
100%
100%
100%
100%
100%
100%
Gaming Technology Solutions Limited United Kingdom
100%
Mobile sportsbook betting platform developer
Operates poker community business
Italian retail betting market
Designs, develops and manufactures software
Retail and Digital Sports Betting
Global broadcaster providing innovative video stream services
for users worldwide
Provision of B2B services within Bingo, Virtual Sports, Sports Betting
and Games Development
Note 38 – Financial instruments and risk management
The Group has exposure to the following risks arising from financial instruments:
• Credit risk;
• Liquidity risk; and
• Market risk.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for
managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
The principal financial instruments of the Group, from which financial instrument risks arises, are as follows:
• Trade receivables;
• Loans receivable;
• Convertible loans;
• Cash and cash equivalents;
•
Investments in equity securities;
• Derivative financial assets;
• Trade payables;
• Bonds;
• Loans and borrowings; and
• Contingent consideration and redemption liability.
208 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements Note 38 – Financial instruments and risk management continued
Financial instrument by category
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.
Carrying amount
Fair value
Note
Measurement
category
2022
€’m
Level 1
€’m
Level 2
€’m
Level 3
€’m
31 December 2022
Continuing operations
Non-current financial assets
Equity investments
Derivative financial assets
Trade receivables
Loans receivable
Current financial assets
Trade receivables
Convertible loans
Loans receivables
Cash and cash equivalents
Non-current liabilities
Bonds
Lease liability
Contingent consideration and redemption liability
Current liabilities
Bonds
Trade payables
Lease liability
Progressive operators’ jackpots and security deposits
Client funds
Contingent consideration and redemption liability
Interest payable
20B
20C
22
21
FVTPL
FVTPL
Amortised cost
Amortised cost
22
23
23
24
28
18
30
28
31
18
24
24
30
33
Amortised cost
FVTPL
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FVTPL
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FVTPL
Amortised cost
9.2
636.4
1.1
29.6
163.9
8.3
8.0
426.5
348.0
54.0
2.3
199.6
61.2
31.8
114.3
39.8
0.6
7.4
1.4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7.8
636.4
—
—
—
8.3
—
—
—
—
2.3
—
—
—
—
—
0.6
—
Playtech plc Annual Report and Financial Statements 2022
209
Financial Statements
Note 38 – Financial instruments and risk management continued
Financial instrument by category continued
Carrying amount
Fair value
Note
Measurement
category
2021
€’m
Level 1
€’m
Level 2
€’m
Level 3
€’m
31 December 2021
Continuing operations
Non-current financial assets
Equity investments
Derivative financial assets
Trade receivables
Convertible loans
Loans receivable
Current financial assets
Trade receivables
Loans receivables
Cash and cash equivalents
Non-current liabilities
Bonds
Loans and borrowings
Lease liability
Contingent consideration and redemption liability
Current liabilities
Trade payables
Lease liability
Progressive operators’ jackpots and security deposits
Client funds
Contingent consideration and redemption liability
Interest payable
Treated as held for sale
Current financial assets
Cash and cash equivalents
Current liabilities
Trade payables
Lease liability
Client deposits
Client funds
20B
20C
22
21
21
FVTPL
FVTPL
Amortised cost
FVTPL
Amortised cost
22
21
24
28
27
18
30
31
18
24
24
30
33
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FVTPL
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FVTPL
Amortised cost
8.1
622.2
6.6
3.7
13.9
178.5
4.5
575.4
875.0
167.1
69.8
6.0
41.3
20.3
110.7
30.4
5.0
10.4
Amortised cost
366.1
Amortised cost
Amortised cost
Amortised cost
Amortised cost
0.4
5.2
138.5
170.3
1.6
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6.5
622.2
—
3.7
—
—
—
—
—
—
—
6.0
—
—
—
—
5.0
—
—
—
—
—
—
The fair value of the contingent consideration and redemption liability is calculated by discounting the estimated cash flows. The valuation model
considers the present value of the expected future payments, discounted using a risk adjusted discount rate.
For details of the fair value hierarchy, valuation techniques and significant unobservable inputs relating to determining the fair value of derivative
financial assets, which are classified as Level 3 of the fair value hierarchy, refer to Note 20C.
The carrying amount does not materially differ from the fair value of the financial assets and liabilities.
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the
objectives and policies to the Group’s Finance function. The overall objective of the Board is to set policies that seek to reduce risk as far as
possible without unduly affecting the Group’s competitiveness and flexibility.
Further details regarding these policies are set out below:
210 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 38 – Financial instruments and risk management continued
A. Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
The Group is exposed to credit risk from its operating activities (primarily trade receivables), its investing activities through loans made and from
its financing activities, including deposits with banks and financial institutions. After the impairment analysis performed at the reporting date,
the expected credit losses (ECLs) are €4.9 million (2021: €7.4 million).
Cash and cash equivalents
The Group held cash and cash equivalents (before ECL) of €426.9 million as at 31 December 2022 (2021: €576.0 million). The cash and cash
equivalents are held with bank and financial institution counterparties, which are rated from Caa- to AA+, based on Moody’s ratings.
Impairment on cash and cash equivalents has been measured on a 12-month expected credit loss basis and reflects the short maturities
of the exposures. The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the
counterparties. The Group uses a similar approach for assessment of ECLs for cash and cash equivalents to those used for trade receivables.
The ECL on cash balances as at 31 December 2022 is €0.4 million (2021: €0.6 million).
A reasonable movement in the inputs of the ECL calculation of cash and cash equivalents does not materially change the ECL to be recognised.
Financial institutions
with below A- rating
and no rating
€’m
Financial institutions
with A- and
above rating
€’m
Total
€’m
Continuing operations
At 31 December 2022
At 31 December 2021
Treated as held for sale
At 31 December 2022
At 31 December 2021
426.9
576.0
—
366.1
214.2
291.7
—
291.9
212.7
284.3
—
74.2
Trade receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also
considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country
in which customers operate.
As at 31 December 2022, the Group has trade receivables of €165.0 million (2021: €185.1 million) which is net of an allowance for ECL
of €4.5 million (2021: €6.8 million).
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables. To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
The expected loss rates are calculated based on past default experience and an assessment of the future economic environment. The ECL is
calculated with reference to the ageing and risk profile of the balances.
The carrying amounts of financial assets represent the maximum credit exposure.
Set out below is the movement in the allowance for expected credit losses of trade receivables:
31 December 2022
Expected credit loss rate
Gross carrying amount
Expected credit loss
Trade receivables – net
31 December 2021
Expected credit loss rate
Gross carrying amount
Expected credit loss
Trade receivables – net
Total
€’m
Not past due
€’m
1–2 months
overdue
€’m
1.1%
27.2
(0.3)
26.9
3.0%
124.9
(3.7)
121.2
Not past due
€’m
1–2 months
overdue
€’m
4.2%
139.6
(5.9)
133.7
1.6%
32.6
(0.5)
32.1
2.7%
169.5
(4.5)
165.0
Total
€’m
3.5%
191.9
(6.8)
185.1
More than
2 months
past due
€’m
2.9%
17.5
(0.5)
17.0
More than
2 months
past due
€’m
1.9%
19.7
(0.4)
19.3
A reasonable movement in the inputs of the ECL calculation of trade receivables does not materially change the ECL to be recognised.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within the impairment of financial assets.
Subsequent recoveries of amounts previously written off are credited against the same line item.
Playtech plc Annual Report and Financial Statements 2022
211
Financial Statements
Note 38 – Financial instruments and risk management continued
A. Credit risk continued
Trade receivables continued
The movement in the ECL in respect of trade receivables during the year was as follows:
Balance at 1 January
Charged to profit or loss
Balance at 31 December
2022
€’m
6.8
(2.3)
4.5
2021
€’m
21.7
(14.9)
6.8
Loans receivable
The Group recognised an allowance for expected credit losses for all debt instruments given to third parties based on past default experience
and assessment of the future economic environment. For the year ended 31 December 2022, the Group recognised provision for expected
credit losses of €1.6 million in the profit or loss relating to loans receivable (2021: €Nil).
Balance at 1 January
Charged to profit or loss
Balance at 31 December
2022
€’m
—
1.6
1.6
2021
€’m
—
—
—
Furthermore, €3.0 million of an existing loan to Gameco was impaired as at 31 December 2022 (refer to Note 20B). At 31 December 2021,
there was a loan impairment of €1.2 million relating to BGO.
B. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group’s objective when managing liquidity is to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted and
include contractual interest payments. Balances due within one year equal their carrying balances as the impact of discounting is not significant.
2022
Bonds
Lease liability
Contingent consideration and redemption liability
Trade payables
Progressive and other operators’ jackpots
Client funds
Interest payable
Provisions for risks and charges
2021
Loans and borrowings
Bonds
Lease liability
Contingent consideration and redemption liability
Trade payables
Progressive and other operators’ jackpots
Client funds
Interest payable
Provisions for risks and charges
Carrying amount
€’m
547.6
85.8
2.9
61.2
114.3
39.8
7.4
13.9
872.9
167.1
875.0
90.1
11.0
41.3
110.7
30.4
10.4
16.7
Total
€’m
604.6
110.2
7.9
61.2
114.3
39.8
7.4
13.9
959.3
173.8
979.7
107.1
11.6
41.3
110.7
30.4
10.4
16.7
1,352.7
1,481.7
Contractual cash flows
Within 1 year
€’m
1–5 years
€’m
More than 5 years
€’m
221.1
34.1
0.2
61.2
114.3
39.8
7.4
3.9
482.0
3.3
34.8
22.3
5.1
41.3
110.7
30.4
10.4
3.2
261.5
383.5
43.1
7.7
—
—
—
—
10.0
444.3
170.5
944.9
59.7
6.5
—
—
—
—
13.5
1,195.1
—
33.0
—
—
—
—
—
—
33.0
—
—
25.1
—
—
—
—
—
—
25.1
212 Playtech plc Annual Report and Financial Statements 2022
Notes to the financial statements continuedFinancial Statements
Note 38 – Financial instruments and risk management continued
C. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s
income or the value of its holding of financial instruments.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising
the return.
Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.
Foreign exchange risk arises because the Group has operations located in various parts of the world. However, the functional currency of those
operations is the same as the Group’s primary currency (Euro) and the Group is not substantially exposed to fluctuations in exchange rates in
respect of assets held overseas.
Foreign exchange risk also arises when the Group operations enters into foreign transactions, and when the Group holds cash balances,
in currencies denominated in a currency other than the functional currency.
31 December 2022
Continuing operations
Cash and cash equivalents
Progressive operators’ jackpots and security deposits
Cash and cash equivalents less client funds
31 December 2021
Continuing operations
Cash and cash equivalents
Progressive operators’ jackpots and security deposits
Cash and cash equivalents less client funds
31 December 2021
Treated as held for sale
Cash and cash equivalents
Client funds and client deposits
Cash and cash equivalents less client funds
In EUR
€’m
In USD
€’m
In GBP
€’m
338.5
(139.0)
199.5
In EUR
€’m
477.4
(126.6)
350.8
In EUR
€’m
85.1
(63.7)
21.4
5.8
(0.2)
5.6
In USD
€’m
34.9
(0.1)
34.8
In USD
€’m
211.1
(208.6)
2.5
60.2
(14.9)
45.3
In GBP
€’m
41.5
(14.4)
27.1
In GBP
€’m
44.4
(12.1)
32.3
In other
currencies
€’m
22.4
—
22.4
In other
currencies
€’m
22.2
—
22.2
In other
currencies
€’m
25.5
(24.4)
1.1
Total
€’m
426.9
(154.1)
272.8
Total
€’m
576.0
(141.1)
434.9
Total
€’m
366.1
(308.8)
57.3
The Group’s policy is not to enter into any currency hedging transactions.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating
interest rates. The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate bonds and loans and borrowings.
At 31 December 2022, none of the Group’s borrowings are at a variable rate of interest (2021: 16%).
Any reasonably possible change to the interest rate would have an immaterial effect on the interest payable.
Equity price risk
The Group is exposed to market risk by way of holding some investments in other companies on a short-term basis. Variations in market value
over the life of these investments will have an immaterial impact on the balance sheet and the statement of comprehensive income.
Playtech plc Annual Report and Financial Statements 2022
213
Financial Statements
Note 39 – Reconciliation of movement of liabilities to cash flows arising from financing activities
Balance at 1 January 2022
Changes from financing cash flows
Interest payable on bonds and loans and borrowings
Repayment of loans and borrowings
Repayment of bonds
Payment of contingent consideration
and redemption liability
Principal paid on lease liability
Interest paid on lease liability
Loans and
borrowings
€’m
167.1
—
(166.1)
—
—
—
—
Bonds
€’m
875.0
—
—
(330.0)
—
—
—
Liabilities
Interest on
loans and
borrowings
and bonds
€’m
10.4
(36.7)
—
—
—
—
—
Total changes from financing cash flows
(166.1)
(330.0)
(36.7)
Other changes
Liability related
New leases
Interest on bonds, bank borrowings and
other borrowings
Interest on lease liability
Movement in deferred and contingent
consideration and redemption liability
Payment of contingent consideration related
to investments
Additional contingent consideration
Disposal of subsidiary/discontinued operations
Foreign exchange difference
Total liability-related other changes
Balance at 31 December 2022
Balance at 1 January 2021
Changes from financing cash flows
Interest payable on bonds and loans and borrowings
Repayment of loans and borrowings
Payment of contingent consideration and
redemption liability
Principal paid on lease liability
Interest paid on lease liability
—
—
—
—
—
—
—
(1.0)
(1.0)
—
Loans and
borrowings
€’m
308.9
—
(150.0)
—
—
—
Total changes from financing cash flows
(150.0)
Other changes
Liability related
New leases
Interest on bonds, bank borrowings and
other borrowings
Interest on lease liability
Movement in deferred and contingent
consideration and redemption liability
Payment of contingent consideration related
to investments
Foreign exchange difference
Total liability-related other changes
—
—
—
—
—
8.2
8.2
—
2.6
—
—
—
—
—
—
2.6
547.6
Bonds
€’m
873.1
—
—
—
—
—
—
—
1.9
—
—
—
—
1.9
Balance at 31 December 2021
167.1
875.0
214 Playtech plc Annual Report and Financial Statements 2022
—
33.6
—
—
—
—
—
—
33.6
7.3
Liabilities
Interest on
loans and
borrowings
and bonds
€’m
10.5
(39.4)
—
—
—
—
(39.4)
—
39.3
—
—
—
—
39.3
10.4
Contingent
consideration
and redemption
liability
€’m
11.0
—
—
—
(5.9)
—
—
(5.9)
—
—
—
(4.3)
(1.0)
2.9
—
0.2
(2.2)
2.9
Contingent
consideration
and redemption
liability
€’m
9.7
—
—
(0.7)
—
—
(0.7)
—
—
—
6.2
(4.1)
(0.1)
2.0
11.0
Lease
liabilities
€’m
95.3
—
—
—
—
(22.5)
(5.7)
(28.2)
19.0
—
5.7
—
—
—
(4.7)
(1.3)
18.7
Total
€’m
1,158.8
(36.7)
(166.1)
(330.0)
(5.9)
(22.5)
(5.7)
(566.9)
19.0
36.2
5.7
(4.3)
(1.0)
2.9
(4.7)
(2.1)
51.7
85.8
643.6
Lease
liabilities
€’m
88.3
—
—
—
(22.7)
(5.6)
(28.3)
26.8
—
5.6
—
—
2.9
35.3
95.3
Total
€’m
1,290.5
(39.4)
(150.0)
(0.7)
(22.7)
(5.6)
(218.4)
26.8
41.2
5.6
6.2
(4.1)
11.0
86.7
1,158.8
Notes to the financial statements continuedFinancial Statements
Note 40 – Events after the reporting date
Post year end, 50% of the service fee entitlement of a third-party service provider of the Group in connection with one of the Group’s structured
agreements was redeemed pursuant to the exercise of an option. A redemption payment of €41.3 million was made to the service provider in
March 2023.
Post year end, the RTO explained in Note 23 completed, resulting in the Group owning 16% of the issued and outstanding common shares of
Baden Resources Inc (now renamed to NorthStar Gaming Holdings Inc.), as well as warrants giving the Group the right to further increase its
stake potentially beyond 20% of the issued and outstanding common shares.
In March 2023 the Group announced a strategic partnership with Hard Rock Digital (HRD), the exclusive, global vehicle for interactive gaming
and sports betting for Hard Rock International and Seminole Gaming, to supply its products and services predominantly under long-term
commercial agreements. Alongside these commercial arrangements, the Group has also invested $85 million (c.€80 million) in exchange
for a low single digit percentage minority equity ownership stake in HRD.
Playtech plc Annual Report and Financial Statements 2022
215
Financial Statements Company statement of changes in equity
For the year ended 31 December 2022
Balance at 1 January 2022
Total comprehensive loss for the year
Loss for the year
Total comprehensive loss for the year
Transactions with the owners of the Company
Contributions and distributions
Exercise of options
Employee stock option scheme (Note 11)
Total contributions and distributions
Total transactions with the owners of the Company
Balance at 31 December 2022
Balance at 1 January 2021
Total comprehensive income for the year
Profit for the year
Total comprehensive income for the year
Transactions with the owners of the Company
Contributions and distributions
Exercise of options
Employee stock option scheme (Note 11)
Transfer from treasury shares to Employee Benefit Trust (Note 11)
Total contributions and distributions
Total transactions with the owners of the Company
Balance at 31 December 2021
Additional paid
in capital
€’m
Employee
Benefit Trust
€’m
606.0
(22.6)
—
—
—
—
—
—
606.0
592.1
—
—
—
—
13.9
13.9
13.9
606.0
—
—
5.4
—
5.4
5.4
(17.2)
—
—
—
—
—
(22.6)
(22.6)
(22.6)
(22.6)
Retained
earnings
€’m
656.2
(23.9)
(23.9)
(6.0)
8.3
2.3
2.3
634.6
(300.6)
950.1
950.1
(13.9)
11.9
8.7
6.7
6.7
Total equity
€’m
1,239.6
(23.9)
(23.9)
(0.6)
8.3
7.7
7.7
1,223.4
291.5
950.1
950.1
(13.9)
11.9
—
(2.0)
(2.0)
656.2
1,239.6
216 Playtech plc Annual Report and Financial Statements 2022
Financial Statements
Company balance sheet
As at 31 December 2022
Non-current assets
Investments in subsidiaries
Investment in associate
Other non-current assets
Derivative financial asset
Deferred tax asset
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
Equity
Additional paid in capital
Employee Benefit Trust
Retained earnings
Non-current liabilities
Other payables
Bonds
Loans and borrowings
Current liabilities
Bonds
Trade and other payables
Note
2022
€’m
2021
€’m
7
8
8
9
9
10
11
14
13
12
13
14
1,208.7
35.0
0.3
1.4
23.4
770.5
2,039.3
14.8
2.5
17.3
1,201.4
—
0.3
—
10.0
895.8
2,107.5
207.9
37.7
245.6
2,056.6
2,353.1
606.0
(17.2)
634.6
1,223.4
9.4
348.0
—
357.4
199.6
276.2
475.8
606.0
(22.6)
656.2
1,239.6
—
875.0
167.1
1,042.1
—
71.4
71.4
TOTAL EQUITY AND LIABILITIES
2,056.6
2,353.1
The financial information was approved by the Board and authorised for issue on 23 March 2023.
Mor Weizer
Chief Executive Officer
Chris McGinnis
Chief Financial Officer
Playtech plc Annual Report and Financial Statements 2022
217
Financial Statements
Notes to the Company financial statements
Note 1 – General
The principal activity of Playtech plc (the “Company”) is the holding of investments and the provision of financial support to Group companies.
Note 2 – Basis of preparation
The financial statements have been prepared in accordance with FRS 101 “Reduced Disclosure Framework” (March 2018) and updated for
amendments issued subsequently. Because of the disclosure reductions, financial statements prepared under FRS 101 do not comply with all
of the requirements of adopted IFRSs. In common with UK incorporated entities preparing parent company financial statements in accordance
with FRS 101 the Company has not presented a statement of profit or loss and other comprehensive income.
The Company, being a qualifying entity (FRS 101:8(g)), has been granted an exemption from preparing the following:
• a statement of cash flows as per the requirements of IAS 1 Presentation of Financial Statements;
• disclosure of compensation for key management personnel and amounts incurred by the Company for the provision of key management
personnel services provided;
• disclosure requirements of IFRS 7 other than for those instruments where these disclosures are still required to comply with the law; and
• disclosure requirements of IFRS 13 other than for those instruments where these disclosures are still required to comply with the law.
Details of the Company’s accounting policies are included in Note 5.
Going concern basis
Detailed reference to the exact procedures applied by the Directors in ensuring that the Company will have adequate financial resources to
continue in operational existence over the relevant going concern period are described in Note 2 of the Group consolidated financial statements.
Based on this Note it is therefore considered appropriate to adopt the going concern basis in the preparation of the Company’s financial statements.
Note 3 – Functional and presentation currency
The financial statements are presented in Euro, which is the Company’s functional and presentation currency. All amounts have been rounded
to the nearest thousand, unless otherwise indicated.
Note 4 – New standards, interpretations and amendments adopted by the Group
New standards, interpretations and amendments adopted from 1 January 2022
The Company applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after
1 January 2022, but do not have a material impact on the financial statements of the Company.
New standards, interpretations and amendments not yet effective
There a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future
accounting periods that the Company has decided not to adopt early.
The amendments are applied retrospectively for annual periods on or after 1 January 2023:
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Disclosure of Accounting Policies.
The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances
of the term “significant accounting policies” with “material accounting policy information”. Accounting policy information is material if, when
considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions
that the primary users of general purpose financial statements make on the basis of those financial statements.
The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other
events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related
transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material
transactions, other events or conditions is itself material.
The amendments to IAS 1 are effective for annual periods beginning on or after 1 January 2023, with earlier application permitted, and are
applied prospectively. The amendments to IFRS Practice Statement 2 do not contain an effective date or transition requirements.
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates.
The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition,
accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”.
The definition of a change in accounting estimates was deleted. However, the Board retained the concept of changes in accounting estimates
in the standard with the following clarifications:
• A change in accounting estimate that results from new information or new developments is not the correction of an error.
• The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates
if they do not result from the correction of prior period errors.
The amendments are effective for annual periods beginning on or after 1 January 2023 to changes in accounting policies and changes in
accounting estimates that occur on or after the beginning of that period, with earlier application permitted.
The Company does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Company.
218 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Note 4 – New standards, interpretations and amendments adopted by the Group continued
New standards, interpretations and amendments not yet effective continued
The following amendments are effective for the period beginning 1 January 2024:
• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification
of Liabilities as Current or Non-current – deferral of effective date.
The amendments affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount
of timing of recognition of any asset, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or non-current is based on the rights that are in existence at the end of the
reporting period, specify that the classification is unaffected by expectations about whether an entity will exercise its right to defer settlement
of a liability, explain the rights that are in existence if covenants are complied with at the end of the reporting period, and introduce a definition
of “settlement” to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
Note 5 – Significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. The Company has consistently
applied the following accounting policies to all relevant periods, except if mentioned otherwise.
Subsidiaries
Subsidiaries are entities controlled by the Company. The Company “controls” an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as an expense in the period
in which the impairment is identified. Subsequent changes in value include employee share option additions and subsidiary capital contributions
in the form of debt settlement.
Associates
An associate is an entity over which the Company has significant influence and is neither a subsidiary nor an interest in a joint venture. Significant
influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The existence of significant influence by an entity is usually evidenced in one or more of the following ways in accordance with IAS 28 Investment
in Associates and Joint Ventures, paragraph 6:
• representation on the board of directors or equivalent governing body of the investee;
• participation in policy-making processes, including participation in decisions about dividends or other distributions;
• material transactions between the entity and its investee;
•
interchange of managerial personnel; or
• provision of essential technical information.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting.
Under the equity method, an investment in associate is initially recognised in the balance sheet at cost and adjusted thereafter to recognise
the Company’s share of the profit or loss and other comprehensive income of the associate.
Interest income
Interest income is recognised over time, on a time-proportion basis, using the effective interest method.
Interest expense
Interest expense is charged to profit or loss over the time the relevant interest relates to.
Foreign currencies
The financial statements are presented in the currency of the primary economic environment in which the Company operates, the Euro (€)
(its functional currency).
In preparing the financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at
the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences arising on the settlements of monetary items and on the retranslation of monetary items are included in profit or loss for
the period. Exchange differences arising on the retranslation of non-monetary items, carried at fair value, are included in profit or loss for the
period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other
comprehensive income and then equity.
Dividends
Dividend distribution to the Company’s shareholders is recognised in the Company’s financial statements in the year in which they are approved
by the Company’s shareholders.
Playtech plc Annual Report and Financial Statements 2022
219
Financial Statements Notes to the Company financial statements continued
Note 5 – Significant accounting policies continued
Financial instruments
(i) Recognition
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and liabilities are initially
recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets
(ii) Classification
The Company classifies its financial assets at amortised cost.
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing
financial assets, in which case all affected financial assets are classified on the first day of the first reporting period following the change in
business model.
(iii) Measurement
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the
Company’s business model for managing them. Financial assets are measured at amortised cost and arise principally through intercompany
balances being amounts from other Group companies in the ordinary course of business, but also incorporate other types of contractual
monetary assets. They are initially recognised at fair value plus transaction costs. The Company holds the intercompany receivables with the
objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest rate
method, less provision for impairment.
ECL on intercompany receivables is based on past default experience and an assessment of the future economic environment. ECL and
specific provisions are considered and calculated with reference to the ageing and risk profile of the balances. The Company uses judgement
in making these assumptions and selecting the inputs to the impairment calculations based on the Company’s past history, existing market
conditions as well as forward-looking estimates at the end of each reporting period. Based on past experience and how the Group operates
in relation to intercompany positions, the ECL is negligible because these balances are usually cleared, either through repayment or capital
contribution.
Other receivables consist of amounts generally arising from transactions outside the usual operating activities of the Company such as the
proceeds from disposal of investment. Due to the short-term nature of the other current receivables, their carrying amount is considered
to be the same as their fair value. For the majority of the non-current receivables, the fair values are also not significantly different to their
carrying amounts.
(iv) Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset
are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain
control of the financial asset.
The Company enters into transactions whereby it transfers assets recognised in its balance sheet but retains either all or substantially all of the
risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
(v) Impairment
The Company has assessed all types of financial assets that are subject to the expected credit loss model:
•
intercompany receivables; and
• cash and cash equivalents.
For intercompany receivables and cash and cash equivalents, the Company applies the general approach for calculating the expected credit
losses. Due to the short-term nature of these assets (i.e less than 12 months), the Company recognises expected credit losses over the lifetime
of the assets.
For cash and cash equivalents, ECL was considered and calculated by reference to Moody’s credit ratings for each financial institution. The
cash and cash equivalents held with banks are all rated with A, based on Moody’s ratings. As a result, the probability of default of each institution
is considered insignificant.
Financial liabilities
(vi) Classification and measurement
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for
trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and
losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.
(vii) Derecognition
The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. The Company also derecognises
a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial
liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-
cash assets transferred or liabilities assumed) is recognised in profit or loss.
220 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Note 5 – Significant accounting policies continued
Financial liabilities continued
(viii) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company
currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
Cash and cash equivalents
Cash and cash equivalents comprise cash in banks and demand deposits and are carried at amortised cost because: (i) they are held
for collection of contractual cash flows and those cash flows represent SPP; and (ii) they are not designated at FVTPL.
Trade and other payables
Trade and other payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from
suppliers. Trade and other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade and other payables are recognised at fair value and subsequently at amortised cost using the effective interest method.
Share capital
Ordinary shares are classified as equity and are stated at the proceeds received net of direct issue costs.
Share buyback
Consideration paid for the share buyback is recognised against the additional paid in capital. Any excess of the consideration paid over
the weighted average price of shares in issue is debited to the retained earnings.
Employee Benefit Trust
Consideration paid/received for the purchase/sale of shares subsequently put in the Employee Benefit Trust, which is controlled by the
Company, is recognised directly in equity. The cost of shares held is presented as a separate reserve (the “Employee Benefit Trust reserve”).
Any excess of the consideration received on the sale of treasury shares over the weighted average cost of the shares sold is credited to
retained earnings.
Note 6 – Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In
the future, actual experience may differ from these estimates and assumptions. The areas requiring the use of estimates and critical judgements
that may potentially have a significant impact on the Company’s earnings and financial position are detailed below.
Estimates and assumptions
Impairment of investment in subsidiary companies
The Company is required to test if events or changes in circumstances indicate that the carrying amount of its investments may not be recoverable.
In making this assessment there were no indicators of impairment evident and as such no impairment of investments in subsidiary companies
has been recognised during the year. Please refer to Note 7 for the breakdown of the impairment to investments.
The assessment considered the following key points on the material investments the Company holds:
•
•
investment in Playtech Holdings Limited and its relevant subsidiaries of €905.3 million includes the Snaitech operations which comfortably
cover the investment value; and
investment in Playtech Software Limited of €261.9 million; this company holds a significant number of key IP and major activities of the Group
which is the reason why there are no factors indicating there is an impairment.
Impairment of financial assets
Loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company’s financial assets
consist of intercompany receivables and cash and cash equivalents. ECL on cash balances was considered and calculated by reference to
Moody’s credit rating for each financial institution.
Note 7 – Investments in subsidiaries
Investment in subsidiaries at 1 January
Additional capital contribution1
Employee stock options
Disposals3
Impairments2
Investment in subsidiaries at 31 December
2022
€’m
1,201.4
—
8.1
(0.8)
—
1,208.7
2021
€’m
1,144.2
49.1
13.9
—
(5.8)
1,201.4
1 During 2021 the Group agreed to forgive certain outstanding debt due from subsidiaries with a book value of €49.1 million which has accordingly been treated as additional capital contribution.
2
3
Impairment for the year ended 31 December 2021 relates to €1.2 million impairment of Playtech Holding Sweden AB Limited and €4.6 million of PTVB Management Limited.
In July 2022, the Company completed the disposal of its investment in Finalto Group Limited (formerly known as TradeTech Holdings Limited) realising a profit on disposal of €49.0 million. Out of the
€0.8 million disposals, the €0.4 million relates to PT Gaming Limited which was dissolved during 2022.
Playtech plc Annual Report and Financial Statements 2022
221
Financial Statements
Notes to the Company financial statements continued
Note 7 – Investments in subsidiaries continued
The details of the investments are as follow:
Name
Country of incorporation
Proportion of voting rights and
ordinary share capital held
Nature of business
Playtech Holding Limited (ex. Playtech
Software Limited)
Isle of Man
100%
Holding company, transferred its activities in 2021 to
Playtech Software Ltd
Video B Holding Limited
British Virgin Islands
100%
PTVB Management Limited
Isle of Man
Technology Trading IOM Limited
Isle of Man
PT Turnkey Services Limited
Isle of Man
Playtech Holding Sweden AB Limited
Sweden
Roxwell Investments Limited
Factime Investments Ltd
Isle of Man
Isle of Man
VS Technology Limited
United Kingdom
100%
100%
100%
100%
100%
100%
100%
Playtech Software Limited
United Kingdom
100%
Trading company for the Videobet software, owns the
intellectual property rights of Videobet and licenses it
to customers
Management company
Holding company, transferred its activities in 2021 to
Playtech Software Ltd
Holding company of the Turnkey Services Group
Holding company of Mobenga AB
Holds the Employee Benefit Trust (2014 EBT)
Holding company of Juego Online EAD
Licensing online gaming software and games to customers in
South America
Main trading company from 2021, owns the intellectual
property rights and licenses the software to customers
Playtech Retail Limited
British Virgin Islands
100%
Dormant company
Note 8 – Investment in associate and derivative financial asset
Investment in associate at 1 January
Acquisitions in the year
Share of loss from associate
Investment in associate at 31 December
2022
€’m
—
35.3
(0.3)
35.0
2021
€’m
—
—
—
—
The details of the investment are as follow:
Name
Country of incorporation
Proportion of voting rights
and ordinary share capital held
Nature of business
LSports Data Limited
Israel
30.89%
Partners with sportsbooks to create engaging customer offerings by
utilising the most accurate real-time data on a broad range of events
In November 2022, the Company acquired 30.89% of LSports for a total consideration of €36.7 million. A total of €0.3 million was recognised
in relation to the amortisation of intangibles and the release of the deferred tax liability arising on acquisition in the statement of comprehensive
income for the year ended 31 December 2022, with a corresponding entry against the investment in associate. No share of profit was recognised
in the profit or loss for the year ended 31 December 2022, as the amount was assessed as insignificant.
Furthermore, the Company has an option to acquire up to 49% (so an additional 18.11%) of the equity of LSports (“LSports Option”). The LSport
Option is exercisable under the following conditions:
• within 90 days from the date of receipt of the LSports audited financial statements for each of the years ending 31 December 2024, 2025
and 2026; or
• at any time until 31 December 2026 subject and immediately prior to the consummation of an Initial Public Offering or Merger & Acquisition
event of LSports.
The fair value of the option at acquisition date was €1.4 million with no change in fair value as at 31 December 2022.
222 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Note 9 – Trade and other receivables
Amounts due from subsidiary undertakings
Total non-current
Other receivables
Amounts due from subsidiary undertakings
Total current
2022
€’m
770.5
770.5
9.8
5.0
14.8
2021
€’m
895.8
895.8
2.5
205.4
207.9
Management has assessed its receivables from Group companies using a forward-looking expected credit loss model (ECL). During
2022, the Company impaired €2.4 million of receivable from PT Investments GC Inc. given that the latter company also impaired a part of its
external receivables.
Included in other receivables above, is a convertible debenture of C$12.25 million (€8.4 million) issued to NorthStar Gaming Inc in December
2022 that will convert into equity and warrants in connection with NorthStar’s proposed reverse takeover (the “RTO”) of Baden Resources Inc.
The fair value of the convertible debenture was assessed as being materially in line with its face value at 31 December 2022. The RTO completed
in March 2023 (refer to Note 15).
Note 10 – Cash and cash equivalents
Cash at bank
Deposits
Note 11 – Shareholders’ equity
A. Share capital
Share capital is comprised of no par value shares as follows:
Authorised1
Issued and paid up
2022
€’m
2.5
—
2.5
2021
€’m
37.5
0.2
37.7
2022
Number of shares
2021
Number of shares
N/A
309,294,243
N/A
309,294,243
1 The Company has no authorised share capital, but it is authorised to issue up to 1,000,000,000 shares of no par value.
The table below shows the movement of the shares:
At 1 January 2021
Transfer to EBT
Exercise of options
At 31 December 2021/1 January 2022
Exercise of options
Shares in issue/
circulation
Number of shares
297,603,815
—
1,640,511
299,244,326
1,743,990
Treasury shares
Number of shares
Shares held by
2014 EBT
Number of shares
Shares held by
2021 EBT
Number of shares
Total
Number of shares
9,965,889
(7,028,339)
—
2,937,550
—
1,724,539
—
(1,640,511)
84,028
(84,028)
— 309,294,243
—
—
7,028,339
—
7,028,339
(1,659,962)
309,294,243
—
At 31 December 2022
300,988,316
2,937,550
—
5,368,377 309,294,243
B. Employee Benefit Trust
In 2014, the Group established an Employee Benefit Trust (2014 EBT) by acquiring 5,517,241 shares for a total of €48.5 million.
Up to May 2019, the Group could not hold treasury shares under the Company’s memorandum and articles of association and therefore a Group
company, Roxwell Investments Limited, purchased the shares for the Employee Benefit Trust (EBT) through an intercompany loan. Any exercise
of options released shares from the EBT to the outstanding shares of the Company and offset these with the intercompany loan. Following
the change in the memorandum and articles of association, the Company is entitled to hold treasury shares and the EBT is recognised in the
statement of changes in equity of the Company as a separate reserve (the “Employee Benefit Trust”). As noted in the table above, in 2021 the
Company transferred 7,028,339 shares held by the Company in treasury to the Employee Benefit Trust (2021 EBT) for a total of €22.6 million.
Playtech plc Annual Report and Financial Statements 2022
223
Financial Statements
Notes to the Company financial statements continued
Note 11 – Shareholders’ equity continued
B. Employee Benefit Trust continued
2021 EBT
During the year ended 31 December 2022, 1,659,962 shares (2021: Nil) were issued at a cost of €5.4 million (2021: €Nil). As at 31 December 2022,
a balance of 5,368,377 shares (2021: 7,028,339 shares) remains in the 2021 EBT with a cost of €17.2 million (2021: €22.6 million).
2014 EBT
During the year ended 31 December 2022, 84,028 shares (2021: 1,640,511 shares) were issued at a cost of €0.6 million (2021: €13.9 million).
C. Share options exercised
During the year 1,794,438 (2021:1,873,307) share options were exercised, of which 50,448 were cash settled (2021: 232,796).
D. Distribution of dividend
The Company did not pay any dividends during the current year.
E. Reserves
The following describes the nature and purpose of each reserve within owners’ equity:
Description and purpose
Reserve
Additional paid in capital
Employee Benefit Trust
Retained earnings
Share premium (i.e. amount subscribed for share capital in excess of nominal value)
Cost of own shares held in treasury by the trust
Cumulative net gains and losses recognised in the statement of comprehensive income
Note 12 – Loans and borrowings
The credit facility of the Company is a revolving credit facility (RCF) which has been restructured during the year. The facility has been reduced
from €317.0 million 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 rates (replacing Euro Libor and Libor rates) based on the currency of each withdrawal. Following the announcement of the UK
Financial Conduct Authority (FCA) as to the future cessation or loss of representativeness of the 35 Libor benchmark, effective from 1 January
2022, Libor rates were replaced with the SONIA daily rate (Sterling Overnight Index Average). As at the reporting date the credit facility drawn
amounted to €Nil (2021: €167.1 million).
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 3.5:1 (2021: 3:1)
•
Interest cover: Adjusted EBITDA/Interest 4:1 (2021: 4:1)
As at 31 December 2022 and 2021 the Company met these financial covenants.
2018 Bond
€’m
2019 Bond
€’m
526.3
1.3
527.6
(330.0)
2.0
199.6
346.8
0.6
347.4
—
0.6
348.0
2022
€’m
348.0
199.6
547.6
Total
€’m
873.1
1.9
875.0
(330.0)
2.6
547.6
2021
€’m
875.0
—
875.0
Note 13 – Bonds
At 1 January 2021
Released capitalised expenses
At 31 December 2021
Repayment of bonds
Released capitalised expenses
At 31 December 2022
Split to:
Non-current
Current
224 Playtech plc Annual Report and Financial Statements 2022
Financial Statements
Note 13 – Bonds continued
Bonds
(a) 2018 Bond
On 12 October 2018, the Company issued €530 million of senior secured notes (the “2018 Bond”) due 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 of the 2018 Bond is 100% of its principal amount. The 2018 Bond 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 in each year commencing on 12 April 2019.
During the year, the Company partially repaid €330.0 million of its 2018 Bond with the balance due in October 2023.
The fair value of the liability component of the bond at 31 December 2022 was €198.8 million (2021: €536.1 million).
(b) 2019 Bond
On 7 March 2019, the Company issued €350 million of senior secured notes (the “2019 Bond”) due 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 of the 2019 Bond is 100% of its principal amount. The 2019 Bond bears interest from 7 March 2019 at the rate of 4.25% per annum
payable semi-annually in arrears on 7 September and 7 March in each year commencing on 7 September 2019.
The fair value of the liability component of the bond at 31 December 2022 was €331.6 million (2021: €358.3 million).
As at 31 December 2022 and 2021, the Group met the required interest cover financial covenant of 2:1 Adjusted EBITDA/interest ratio, for the
combined 2018 and 2019 Bonds.
Note 14 – Trade and other payables
Suppliers and accrued expenses
Payroll and related expenses
Amounts owed to subsidiary undertakings
Accrued interest
Split to:
Non-current
Current
2022
€’m
6.6
37.9
234.4
6.7
285.6
2022
€’m
9.4
276.2
285.6
2021
€’m
16.1
30.7
15.3
9.3
71.4
2021
€’m
—
71.4
71.4
During 2022, the Company was granted a €214.0 million loan from Playtech Services (Cyprus) Limited, which was used to partially repay
€330.0 million of the 2018 Bond. The loan bears interest at the rate of 3.5% and is repayable upon demand. At the same time, a separate loan
of €7.5 million was granted on the same terms from Playtech Services (Cyprus) Limited to partly fund the acquisition of LSports Data Limited.
Refer to Note 8 for details of the acquisition.
Note 15 – Events after the reporting date
Post year end in March 2023, the RTO explained in Note 9 completed, resulting in the Company owning 16% of the issued and outstanding
common shares of Baden Resources Inc, as well as warrants giving the Group the right to further increase its stake potentially beyond 20% of
the issued and outstanding common shares.
Playtech plc Annual Report and Financial Statements 2022
225
Financial Statements
2022
€’000
2021
€’000
2020
€’000
2019
€’000
2018
€’000
1,601.8
405.6
160.5
2,299.3
703.5
19.6
755.4
565.0
1.0
1,701.0
606.0
0.4
(17.2)
—
—
0.3
1,111.5
—
1,205.4
317.1
127.6
2,299.1
845.9
507.4
490.2
1,236.1
344.8
1,581.2
606.0
(0.5)
(23.3)
—
(3.7)
(22.7)
1,025.1
0.3
1,078.5
253.6
27.3
1,667.3
935.3
468.9
513.7
1,352.4
309.2
896.2
592.1
(0.4)
(14.5)
—
(3.7)
(21.3)
343.7
0.3
1,440.5
375.3
138.0
2,062.4
1,005.5
36.8
773.7
1,108.8
3.6
1,218.6
601.0
(0.3)
(16.2)
—
(16.4)
(1.4)
656.2
(4.3)
1,225.3
345.1
259.8
2,101.2
992.5
—
1,017.6
725.6
—
1,350.5
627.8
0.1
(17.9)
45.4
(30.8)
(8.2)
726.3
7.8
53.5
51.5
—
82.4
73.9
24.1
390.8p/731.5p 351.0p/770.0p 140.3p/424.3p 360.5p/457.7p 370.0p/882.2p
42.8
40.9
—
45.5
44.6
18.1
9.2
8.8
—
Five-year summary
Income statement
Total revenues from continuing operations
Adjusted EBITDA from continuing operations
Adjusted net profit from continuing operations
Balance sheet
Non-current assets
Current assets
Assets classified as held for sale
Current liabilities
Non-current liabilities
Liabilities directly associated with assets classified as held for sale
Net assets
Equity
Additional paid in capital
Reserve for re-measurement of employee termination indemnities
Employee benefit trust
Convertible bonds option reserve
Put/Call options reserve
Foreign exchange reserve
Retained earnings
Non-controlling interest
Statistics
Basic adjusted EPS (in Euro cents) from continuing operations
Diluted adjusted EPS (in Euro cents) from continuing operations
Ordinary dividend per share (in Euro cents)
Share price low/high
226 Playtech plc Annual Report and Financial Statements 2022
Financial Statements Company information
Registered office
Ground Floor
St George’s Court
Upper Church Street
Douglas
Isle of Man IM1 1EE
Corporate brokers
Goodbody Stockbrokers
2 Ballsbridge Business Park
Ballsbridge Park
Dublin 4, Ireland
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Communications adviser
Headland PR Consultancy LLP
27 Bush Lane
London EC4R 0AA
Legal adviser
Bryan Cave Leighton Paisner LLP
Adelaide House
London Bridge
London EC4R 9HA
Registrars
Computershare Investor Services
(Isle of Man Limited)
International House
Castle Hill
Victoria Road
Douglas
Isle of Man IM2 4RB
Playtech plc Annual Report and Financial Statements 2022
227
Company Information Notes
228 Playtech plc Annual Report and Financial Statements 2022
CBP018271
Playtech plc’s commitment to environmental issues is reflected in this Annual Report, which
has been printed on Symbol Freelife Satin and Arena Smooth Extra White, FSC® certified
materials. This document was printed by Park Communications using its environmental print
technology, which minimises the impact of printing on the environment. Vegetable-based inks
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www.playtech.com