Plain-text annual report
Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Our strategic roadmap
Our purpose
To create technology that changes the way
people experience gambling entertainment
Our strategy
B2B:
1
2
3
B2C:
4
5
6
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
Optimise
HAPPYBET
for online
Targeted M&A
to expand
Snaitech
Read more about our strategy on pages 10 and 11
Our critical success factors
Scale and
distribution
Data
Sustainable
Success
Innovation
Read more about our strengths on page 30
Sustainability priorities
Pioneering safer
gambling solutions
Promoting integrity and
an inclusive work culture
Read more about our sustainability strategy on pages 48 to 87
Powering action for positive
environmental impact
Partnering on shared
societal challenges
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Strategic Report
Strategic Report
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
8 Our investment case
10 Our strategy
12 Key performance indicators
14 Chief Executive Officer’s review
20 Market trends
28 Business model
32 Product and innovation
44 Stakeholder engagement
48 Responsible business and sustainability
88 Chief Financial Officer’s review
95 Risk management, principal risks
and uncertainties
101 Viability statement
Governance Report
104 Chairman’s introduction to governance
106 Governance at a glance
108 Board of Directors
110 Directors’ governance report
124 Audit Committee report
Remuneration report
129 Statement by the Committee Chair
131 Directors’ Remuneration Policy
136 Annual report on remuneration
146 Directors’ report
Financial Statements
153 Independent auditor’s report
161 Consolidated statement of
comprehensive income
162 Consolidated statement of changes
in equity
163 Consolidated balance sheet
165 Consolidated statement of cash flows
167 Notes to the financial statements
236 Company statement of changes
in equity
237 Company balance sheet
238 Notes to the Company financial
statements
246 Five-year summary
Company Information
247 Company information
View the Digital Summary Report at
www.ar23.playtech.com
Playtech plc Annual Report and Financial Statements 2023
1
Strategic Report
Financial highlights
2023 saw a strong
financial performance
Group revenue growth1
Group Adjusted EBITDA1
7%
€432m
B2B Adjusted EBITDA growth1
Net debt to EBITDA4
14%
Revenue1
€’m
2023
2022
2021
2020
2019
Diluted Adjusted EPS1
c
2023
2022
2021
2020
2019
0.7x
Revenue from regulated markets2
%
Adjusted EBITDA1,5
€’m
1,707
1,602
1,205
1,079
1,441
50.2
51.5
40.9
8.8
44.6
2023
2022
2021
2020
2019
Net debt to EBITDA4
x
2023
2022
2021
2020
2019
92
89
85
84
87
0.7
0.6
1.9
1.7
1.6
2023
2022
2021
2020
2019
Adjusted operating cash flow3
€’m
2023
2022
2021
2020
2019
432
395
308
248
372
383
397
318
276
303
A strong performance
in 2023, driven by
both the B2B and B2C
divisions, with a resilient
balance sheet.“
Chris McGinnis
Chief Financial Officer
2
Playtech plc Annual Report and Financial Statements 2023
1 From continuing operations.
2 B2B and B2C only.
3
4
5
Continuing operations but includes Finalto in FY 2019
and FY 2020. 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 FY 2021 to adjust for changes in jackpot
balances, security deposits and client funds, professional
fees and ADM security deposit.
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.
Adjusted EBITDA for prior years is restated to reflect
Snaitech bank charges being recognised within EBITDA
from FY 2023. Previously, they were recognised within
finance expenses.
Strategic Report
Operational highlights
Good progress made
against strategic priorities
B2B – strengthening across key markets
US continues to
gain traction
2023 was a year where significant progress
was made on executing the US strategy.
We signed a landmark agreement with
Hard Rock Digital in early 2023, including
an $85 million equity investment. We also
launched with several operators in multiple
states, and are now licensed in 11 states with
further applications progressing.
Capitalising
on Live
Live continued to see healthy revenue
growth with regulated markets up 24% in
2023 versus 2022. Investment remains a
priority with the launch of our third US studio
in Pennsylvania, while we have opened a
second studio in Lima. Innovative content
continues to be rolled out, with the launch of
Jumanji™ The Bonus Level Live and Big Bad
Wolf Live.
Structured agreements
drive LatAm growth
During 2023, we witnessed an excellent
performance from Wplay in Colombia and
encouraging progress from Galerabet in
the exciting Brazil market, and continued
to benefit from our highly successful
partnership with Caliplay in Mexico.
B2C – delivering across both retail and online
Preserving brand
leadership
Snai’s brand equity plays a crucial role in
driving growth, particularly in the context of
the advertising ban in the Italian market. In
2023, the Snai brand was ranked number
one in sports betting (retail and online
combined, as measured by gross gaming
revenue (GGR)), which is a testament to its
consistently strong operational performance
and unique brand identity.
Retail betting business
showing strength
Driven by pent-up demand in Italy post
the World Cup, the retail betting division
delivered a record performance, c.20%
above the pre-pandemic levels achieved in
2019. This illustrates the strength of the Snai
brand, and increases the addressable pool of
customers to transition to online.
Bolt-on acquisition;
strong M&A pipeline
In March 2023, Snaitech acquired Giove
Group, a well-established betting operator
in the Puglia region (southern Italy). Giove
holds licences for both retail betting and
online and directly manages 18 betting
shops. The acquisition, while small,
illustrates the appetite to grow the Snaitech
business in Italy.
Championing sustainability across the Company
Pioneering
safer gambling
solutions
Playtech has enhanced its leading Player
Account Management+ (PAM+) offerings
through the development of personalised
responsible gambling tools for individual
players. These tools are capable of adapting
to the players’ risk level, which is calculated
by Playtech’s cutting-edge analytics
tool BetBuddy.
Paving
the road to
net zero
As Playtech sets in motion its net zero plan,
the Company has approved a near-term
science-based emissions reduction target
of 50.4% in its Scope 1, 2 and 3 emissions by
2032, and a net-zero science-based target
by 2040 with the Science-based Target
initiative (SBTi).
Providing support
to colleagues facing
hardship
Playtech launched its Global Benevolent
Fund, an initiative to provide financial
support to colleagues and their immediate
families who may encounter unforeseen,
severe, life-changing challenges such as
medical emergencies, severe illness, and
financial hardship.
Playtech plc Annual Report and Financial Statements 2023
3
Strategic Report
Company overview
The leading platform,
content and services
gambling technology
company
19Countries
with offices
Country
>7,700
Colleagues
>180
Licensees
in
>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 19
countries, mean we are ideally positioned
to capture opportunities in newly regulating
markets and high-growth markets with low
online penetration.
Scale and distribution
Sustainability
Playtech’s scale and distribution network
in both 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 30
Read more on pages 48 to 87
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 41
Read more on pages 32 to 43
4
Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Our operations
B2B
B2C
Providing technology to gambling
operators globally through a revenue
share model and, in certain agreements,
taking a higher share in exchange for
additional services.
Acting directly as an operator in select
markets and generating revenues from
online gambling, gaming machines and
retail betting.
Read more on page 29
Read more on page 28
€684m
Revenue
€182m
Adjusted EBITDA
27%Adjusted EBITDA margin
€1,037m
Revenue
€250m
Adjusted EBITDA
24%Adjusted EBITDA margin
An increasingly more
sustainable division
Snaitech is a fundamentally higher
quality business since acquisition
20%
2017
44%
2023
56%
9%
2018
27%
2023
Regulated B2B revenues
Unregulated B2B revenues
Snaitech % of online revenues
Snaitech % of retail revenues
80%
91%
73%
44%% of regulated B2B
revenues (2017)
80%% of regulated B2B
revenues (2023)
18%Snaitech EBITDA
margin (2018)
27%Snaitech EBITDA
margin (2023)
Playtech plc Annual Report and Financial Statements 2023
5
Strategic Report
Chairman’s statement
Another year of strong strategic
and operational progress
Introduction
I am pleased to be writing to you after another
successful year for Playtech. The Company
has built on the strong strategic and
operational progress of recent years, and
continues to cement its leadership across
both B2B and B2C.
I would like to take this opportunity to thank the
Executive Management team, which continues
to demonstrate its agility and resilience in
navigating a challenging external backdrop,
given the ongoing wars in Ukraine and the
Middle East. I would also like to highlight our
professional and hardworking colleagues
around the world, who remain committed to
supporting all our customers and growing our
business. Finally, I would like to acknowledge
the support of the Non-executive Directors,
who have worked tirelessly in supporting the
Group’s strategy and ambitions.
2023 in review
While there were many challenges in 2023,
the consistent quality at the core of our
business meant that we were able to upgrade
our expectations during the year and deliver
a strong financial performance. This result
was underpinned by good contributions
from both the B2B and B2C businesses, and
ensures we are firmly on track to meet our
medium-term Adjusted EBITDA targets.
B2B
Our B2B performance was powered by
our continued strength in regulated and
soon-to-be-regulated markets:
• We have laid the groundwork for future
growth in the US: we signed a landmark
strategic partnership with Hard Rock
Digital, have three US Live Casino facilities
operational and are now licensed in
11 US states.
•
In Latin America, we further cemented
our leadership position with Caliplay
in Mexico, as well as our position with
Galerabet in Brazil. We are currently
working to resolve a disagreement with
Caliplay, the online casino and sports
betting arm of Caliente. Caliplay remains
a highly important customer for Playtech
and we are committed to continuing to
maintain an open dialogue with Caliplay to
discuss a path forward.
• Live Casino remains an attractive product
vertical and we are continuing to invest in
both physical infrastructure and content to
capitalise on this exciting opportunity.
B2C
Our B2C operations continue to go from
strength to strength, with Snaitech extending
its reputation for excellent performance
across both retail and online:
• The management team at Snaitech
continues to deliver superb results,
underlined by the Snai brand maintaining
its number one market share position
across Italian sports betting brands for
retail and online combined.
• The retail betting division delivered a
record performance, with revenues c.20%
above the pre-pandemic levels achieved
in 2019, illustrating the strength of the
Snai brand. Online continues to perform
well, benefiting from the brand awareness
provided by the retail business.
• We remain very optimistic about the
prospects for B2C, and are actively
looking to accelerate the division’s growth
through targeted M&A and by optimising
HAPPYBET’s online offering.
Corporate activity
Hard Rock Digital
As announced in March 2023, Playtech
signed a landmark strategic agreement with
Hard Rock Digital, the interactive gaming
and sports betting division of Hard Rock
International. Partnering with such an iconic
brand with a proven management team will
significantly strengthen Playtech’s position
in North America and is very much in line
with the Group’s B2B strategy. As part of
the agreement, Playtech has also invested
$85 million in exchange for a minority stake
in Hard Rock Digital.
The momentum across our business and
the Group’s healthy balance sheet have
meant that we have been able to be active in
reviewing potential acquisition opportunities
during 2023, and submitted offers for assets in
the B2C segment and for bolt-on acquisitions
within B2B. We expect to continue to be open
to any opportunities in the coming year, but
will also remain very disciplined on price and
in assessing the potential for acquisitions to
add value for our shareholders.
Refinancing
The refinancing at the end of June 2023
strengthened our balance sheet, giving us
the flexibility to invest in our business as well
as pursue inorganic opportunities. The new
€300 million bond enabled us to redeem
all of the outstanding notes due in 2023
and to repay outstanding debt under the
existing revolving credit facility, which is now
wholly undrawn.
Brian Mattingley
Chairman
We have a clear and proven
strategy across both B2B
and B2C, underpinned
by outstanding products
and extremely talented
colleagues in some
of the most exciting
and fastest growing
markets worldwide.”
6
Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Board changes
Sustainability
At the start of the year, we welcomed Samy
Reeb to the Board as a new independent
Non-executive Director, bringing his
extensive experience of working with
global businesses across wealth and tax
advisory. We are already benefiting from the
additional depth he brings to the Board and
will continue to draw on his expertise in the
years to come.
A big priority of mine has been to improve
the diversity of the Board, and the
appointment of Ruby Yam as an independent
Non-executive Director in June 2023
moved us in the right direction. While it was
unfortunate that she stepped down the
following month for personal reasons, we
continue to be actively focused on achieving
our ambition of having a more diverse Board.
We said goodbye to John Krumins following
our interim results in September 2023. John’s
contribution was invaluable during a period of
significant change for the Company. We wish
him all the best for the future.
Over the year, we have also made changes
to the composition of the Board Committees
to ensure that we are making the most of
the skills available to us. Further information
can be found on page 117 in the Governance
section of this report.
Our performance in 2023 was underpinned
by our sustainability strategy, which is central
to how we operate and serve our customers.
As an organisation, we are committed to
using technology to advance safer gambling.
I am really pleased with the positive steps
we have taken in this area, including bringing
BetBuddy – our player protection tool – to
more brands in more geographies.
2023 also saw Playtech receive recognition
for our efforts to reduce our carbon footprint
against our targets and an improvement
in gender diversity within our leadership
ranks. These are both areas I personally
feel very strongly about, and we will not be
complacent but will continue to invest time
and resources in marching towards the
targets that we have set ourselves.
Israel and Ukraine
As has unfortunately become necessary
in recent years, we have to remain mindful
of geopolitical tensions around the world.
It can be easy for some to forget that the
war in Ukraine rages on, but it remains front
of mind for all of us at Playtech given the
number of employees we have there. As has
been the case since the start of the war, our
colleagues continue to go above and beyond
in providing support to those who remain on
the ground in Ukraine.
We are also deeply saddened by the
devastation and death toll caused by the
ongoing Israel-Hamas war. Following the
initial terrorist attack on 7 October 2023,
our priority was to ensure the safety of our
colleagues in the region and ensure they
had whatever was needed to support them
and their families. It goes without saying that,
as an organisation, we strongly oppose all
forms of hate and we hope for a resolution
in the near future. Until then, we will continue
to offer assistance to the communities we
operate in wherever possible.
Another exciting year ahead
We remain as confident as ever in the
opportunity ahead of us for our business
and the industry we operate in. We have a
clear and proven strategy across both B2B
and B2C, driven by outstanding colleagues
in some of the most exciting and fastest
growing markets worldwide. We are well on
track to meet our medium-term expectations,
and look forward to continuing to deliver
strong returns for all of our stakeholders.
Thank you for your continued support
of Playtech.
Brian Mattingley
Chairman
26 March 2024
People and culture – Global Benevolent Fund
At Playtech, we strive to achieve shared
values and celebrate success along the
way, by empowering Playtech colleagues
to be a force for good in the world. Our
approach aims to help our people work
together to maximise our collective positive
impact on players, local communities and
the environment.
We continually review ways in which we
can support the health and wellbeing of
our people, in good times and bad. In 2023,
Playtech launched its Global Benevolent
Fund, an initiative to provide financial
support to colleagues and their immediate
families who may encounter unforeseen,
severe, life-changing challenges.
Since its inception in late 2023, the Fund
has already supported colleagues in
need, covering hardships such as losing a
family member, long-term injuries and life-
changing illnesses.
Playtech plc Annual Report and Financial Statements 2023
7
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 since the acquisition, accelerated by the
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
The gambling market is in the midst of a super-cycle (see page 20),
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 23) and take advantage of the benefits of AI. In addition, the
variety of its business model offering from structured agreements
to SaaS allows it to serve almost any operator.
Region
Americas
Europe
See pages
20 to 22
Technology
Innovation
Data network effects
See pages
32 to 43
Multiple organic
growth drivers...
...and the means
to capture value
Product
Live Casino
See page 24
Business model
Structured agreements
SaaS
See pages
28 and 29
8
Playtech plc Annual Report and Financial Statements 2023
Strategic Report
2
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 30% versus 59% 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 mean it is ideally
positioned to benefit from this growth opportunity.
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 450 customers with scope to increase wallet share.
Investment to date lays the groundwork for higher operating
leverage going forward.
30%Italy online
penetration1
59%UK online
penetration1
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.
1
Source: H2GC (includes betting and gaming
and excludes lotteries).
…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 2023
9
Strategic Report
Our strategy
Building a market-leading
global business
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.
The LatAm region has strong structural
drivers (see page 21). 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 Spain
and Germany.
2
Capitalise on
Live and SaaS
opportunities
3
Realign resources
to reflect B2B
growth areas
With exciting areas of growth in regulated
markets and several technology trends (see
technology trends on page 23) maturing at
the same time, there is a need to continue to
invest in the B2B 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.
Live represents an enormous opportunity
(see page 24), in which Playtech has invested
heavily. 12 studios are currently operational,
including three in the US with Pennsylvania
opening at the end of 2023. We have more
than doubled the number of tables over
the past five years and invested in both the
latest cutting-edge technology and branded
content, launching Jumanji™ The Bonus
Level Live and Big Bad Wolf Live in the year.
With significant operating leverage in the
business, growth in Live is margin accretive.
The SaaS business model (see page 29)
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
Link to KPIs
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Link to risks
Link to risks
Link to risks
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
See risk section on pages 95 to 100
See KPI section on pages 12 and 13
10 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Embedding sustainability into our culture
At Playtech, we are embedding sustainability in the DNA of our
Company. Our vision is to be the leading technology provider and
partner of choice in regulated markets, delivering a safer, engaging
and entertaining experience and driving a more responsible and
sustainable business and industry.
Sustainability is a Board-level strategic priority, which includes
sustainability-linked remuneration for selected leaders and the
integration of sustainability principles throughout our operations
and supply and value chain.
The most impactful contribution Playtech can make to society is to
advance safer gambling and player protection solutions through
technology. By developing and bringing safer products, data
analytics and player engagement solutions to the market, we are
helping the industry strengthen player protection measures whilst
also helping our licensees succeed in regulated markets.
In addition, we are promoting a culture of integrity and inclusion,
empowering Playtech colleagues to be a force for good in the
world. This includes efforts to ensure operational and day-to-day
decision-making takes into consideration environmental and social
impacts. We are building an equitable workplace, which includes
our efforts to achieve gender equity and equality and support our
people in all dimensions of wellbeing.
B2C: a digital-led approach to drive growth
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
– 30% currently versus 59% 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-only 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.
5
Optimise
HAPPYBET
for online
HAPPYBET sits under the management
of the Snaitech team which continues the
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 now a regulated market,
HAPPYBET is in a strong position, having
been awarded an online sports betting
licence in Germany and beginning to offer
online casino.
6
Targeted
M&A to expand
Snaitech
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 to
participate in the consolidation of the Italian
market and to expand to 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
Link to KPIs
Link to KPIs
1
2
3
4
5
6
7
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
Link to risks
1
2
3
4
5
6
7
Playtech plc Annual Report and Financial Statements 2023
11
Strategic Report
Key performance indicators
Financial
Group revenue growth1
Adjusted EBITDA margin1
7%%
2023
2022
2021
2019
2020
25%%
7
33
12
(25)
27
2023
2022
2021
2020
2019
25.3
24.7
26.3
23.5
26.1
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.
2023 performance
Group revenue grew 7%, driven by regulated markets within the
B2B division as well as Snaitech.
2023 performance
Adjusted EBITDA margin grew 64 bps, mainly driven by operating
leverage on good revenue growth within B2B.
Link to strategy
4
3
2
1
5
6
Link to strategy
4
3
2
1
5
6
Diluted Adjusted EPS1
Adjusted operating cash flow1,2
50.2c
c
2023
2022
2021
2020
2019
€383m
€’m
50.2
51.5
40.9
8.8
44.6
2023
2022
2021
2020
2019
383
397
318
276
303
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.
2023 performance
The movement is due to a rise in Adjusted EBITDA and decrease
in financing costs, more than offset by the increase in amortisation
and depreciation and a higher tax charge.
Link to strategy
1
2
3
4
5
6
12 Playtech plc Annual Report and Financial Statements 2023
Definition
Operating cash flow after adjusting for changes in jackpot balances,
security deposits and client funds, professional fees 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 deliver shareholder returns.
2023 performance
The movement is due to an increase in earnings, more than offset
by the outstanding Caliplay receivable. See Note 7 for more details.
Link to strategy
1
2
3
4
5
6
1 From continuing operations.
2
Includes Finalto up to and including FY 2020. Adjusted for Snaitech’s PREU tax payment of
€90 million relating to 2020, which was paid in 2021 due to circumstances around COVID-19.
Strategic Report
Non-financial
Powering licensees
with safer gambling
solutions
Scope 1 and 2
greenhouse gas
(GHG) emissions
Gender diversity
at senior leadership
level
1 6 brands
Integrated with BetBuddy
38.6%
Reduction since baseline year, 2018
30%/70%
Female/male ratio
9
6
2023
2022
2021
2020
2019
16
2
2
3
10
8
7
7
Brands
Jurisdictions
Definition
Number of brands in jurisdictions that
were integrated and operational as at the
end of the year with the 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.
2023 performance
BetBuddy has expanded into three new
jurisdictions, having been adopted by six
additional brands in Sweden, Italy and
Canada excluding Ontario.
Link to Sustainability Priorities
Pioneering safer gambling solutions.
2023
2022
2021
2020
2019
7,086
6,970
7,892
9,316
10,914
2023
2022
2021
30
26
23
Female
Male
70
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 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.
2023 performance
In 2023, Playtech introduced a new Global
People Framework. This framework sets
out the Company’s people strategy across
all elements of the colleague journey
– from recruitment and onboarding to
succession planning and personal and
professional development.
Link to Sustainability Priorities
Promoting integrity and an inclusive culture.
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 2023.
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. This target
excluded emissions from refrigerants, which
had not yet been considered in 2018.
2023 performance
Playtech’s Scope 1 and 2 (location-based)
emissions, excluding refrigerants, were
7,086 tonnes CO2-equivalent (CO2e) in 2023.
This is a 38.6% reduction compared to the
2018 baseline (11,543 tonnes CO2e). During
2023, Playtech continued to its transition
to renewable electricity in the key markets
where the Company operates. This has
resulted in 57.2% of the Company’s total
energy consumption now coming from
renewable sources, backed up by energy
attribute certificates, up from 56.4% in 2022.
Link to Sustainability Priorities
Powering action for positive
environmental impact.
Playtech plc Annual Report and Financial Statements 2023
13
Strategic Report
Chief Executive Officer’s review
A year of significant progress
across the Company
Overview
2023 was a year of significant progress
across Playtech. We delivered an excellent
financial performance, with strong
contributions from both the B2B and B2C
businesses. We also remain firmly on
track to meet our medium-term Adjusted
EBITDA targets for B2B (€200–€250 million)
and B2C (€300–€350 million), while we
see further long-term upside given the
favourable market dynamics and our
competitive advantages.
Playtech’s B2B business remains focused on
regulated or soon-to-be-regulated markets.
The division benefits from its exposure to
high-growth markets across the Americas
and Europe, which helped the B2B segment
to deliver revenue growth of 8% (6% on a
constant currency basis) to €684 million
(FY 2022: €632 million). Strong operating
leverage ensured Adjusted EBITDA margin
expanded 130 bps, helping to deliver a
14% increase in B2B Adjusted EBITDA
to €182 million (FY 2022: €160 million).
Whilst being mindful that revenue has been
recognised in full from Caliplay despite a
large debtor balance at year end (see Note 7
for more detail), this performance reflected
broad-based growth across our portfolio of
leading products and services.
The opportunity in the US is significant and
we have worked hard to position Playtech
as a leading technology partner of choice
to operators. Playtech now holds licences
in 11 US states, which include recent licence
approvals in Maryland, West Virginia and
Delaware, with applications underway in
further states. Having signed deals with
multiple operators in 2022, 2023 saw a
shift in focus as we looked to execute on
launching with these operators across
multiple states. In 2023, we launched with
Rush Street Interactive and PokerStars, while
also expanding our presence with BetMGM
and BetParx. Playtech also signed a Player
Account Management + (PAM+), Casino
and Live Casino deal with Ocean Resort
and Casino in New Jersey. As our presence
grows, so does our team and our physical
footprint. We now have over 200 colleagues
in the US, and were pleased to open our third
Live facility in the US in Pennsylvania at the
end of 2023, adding to our New Jersey and
Michigan facilities.
We remain optimistic about the potential of
our landmark agreement with Hard Rock
Digital to provide Casino and Live, amongst
other content, in North America. We finished
2023 by completing the first delivery
milestone, launching Casino slots and
Mor Weizer
Chief Executive Officer
The Group made important
financial, strategic and
operational progress
in 2023. Looking ahead,
we remain very confident
in our ability to execute
our strategy and to deliver
value for our shareholders.”
14 Playtech plc Annual Report and Financial Statements 2023
In 2023, we launched with several operators
across multiple states. Rush Street Interactive
went live in Michigan with its Betrivers brand
and in New Jersey with its Sugarhouse brand,
both for Casino. Furthermore, we expanded
our partnership with BetMGM with the
launch of Casino in Michigan and launched
with PokerStars in Michigan for both Casino
and Live.
In partnership with Aristocrat, Playtech
introduced Class II mobile-on-premise
gaming at WinStar World Casino and Resort
in Oklahoma with the Chickasaw Nation,
while also signing a PAM+ deal with Ocean
Resort and Casino in New Jersey to relaunch
its site as BetOcean.com.
Our relationship with BetParx has gone
from strength to strength. In 2023, we
successfully launched Live in our newest
US studio in Pennsylvania, in addition to
New Jersey, featuring Adventure Beyond
Wonderland Live Casino. We also launched
PAM+ in Ohio and Maryland, giving Playtech
a presence with BetParx in five states:
Michigan, Pennsylvania, New Jersey, Ohio
and Maryland. Further product launches in
additional states with BetParx are expected
going forward.
One year on from signing a landmark
strategic agreement with Hard Rock Digital
(HRD), the exclusive Hard Rock International
and Seminole Gaming vehicle for interactive
gaming and sports betting on a global basis,
we remain very optimistic about its potential
to grow our presence in both the US and
other markets. As part of the partnership,
in the US and Canada, HRD’s customers
will enjoy a variety of Playtech’s iGaming
content offering including slots, RNG and live
dealer table games through HRD’s existing
proprietary platform and technology offering.
Strategic Report
table and Live dealer games in New Jersey.
2024 will see us make further progress in
rolling out Playtech’s high-quality offering
across North America. Under the terms of
the agreement, Playtech has also invested
$85 million (€79.8 million) in exchange for
a small minority stake in Hard Rock Digital.
Playtech is well positioned in Latin America,
with established strategic agreements in
Mexico and Colombia, which continue to
show strong growth. At the same time, we
have moved quickly to take advantage of
newly regulated markets, such as Brazil. New
legislation for sports betting and iGaming has
now been signed into law by the President,
and we have been encouraged by the early
performance of our strategic agreement
with Galerabet.
Within our medium-term guidance for B2B,
we have set a medium-term SaaS revenue
target of €60 million–€80 million. In 2023,
we added over 100 new brands and grew
revenue by over 50% to €50 million (FY
2022: €32 million), meaning we remain on
track to meet this target. Attracting new
brands through our SaaS business model
is a key component of our strategy, helping
to diversify our customer base and take
advantage of the business model’s inherent
high operating leverage.
Snaitech powered the B2C business to
another excellent performance in 2023.
Revenues across the B2C division rose
5% to €1,037.0 million (2022: €983.1 million),
exceeding €1 billion for the first time.
Adjusted EBITDA increased 6% to
€250.3 million (2022: €235.2 million). While
Snaitech delivered another strong overall
performance, the dynamics within 2023 were
varied. In the first half of the year, within the
betting segment, sales were up significantly
across both retail and online due to pent-up
demand after the football World Cup (given
Italy was absent from the tournament). This
was partly offset in the second half of the
year due to the impact of customer-friendly
sporting results in September and October,
as has been well flagged by peers across
the industry. The online segment continues
to see good growth, with Snaitech well
placed to benefit given the strength of the
brand, the continuous improvements to
apps and technology and a broadening of
its content offering. The underpenetration
of this segment continues to be a structural
tailwind for the business.
Underpinning this performance are our
talented colleagues around the world.
Despite the significant disruption from
geopolitical conflict during the year, they
have continued to deliver for our customers
and we are truly grateful to them all.
Israel and Ukraine
Many of our colleagues continue to be
affected by the Israel-Hamas war and war in
Ukraine. Our number one priority has been
the safety and security of our colleagues and
their families, and we are assisting them with
a range of support measures. In Israel, as
was the case in Ukraine, we have extended
support to aid local response efforts with
in-kind donations and volunteering as well
as donations to hospitals and charities.
We are also providing colleagues and their
families with mental health and trauma
services, as well as, where appropriate,
financial assistance. Finally, I want to extend
my appreciation to those who have been
volunteering and supporting our colleagues,
friends and their families affected by these
tragic events.
B2B
Core B2B
Regulated markets
Playtech’s B2B business is one of the
leading platform, content and services
providers in regulated and soon-to-be-
regulated markets. The majority of these are
high-growth markets such as the US, Latin
America and certain European countries.
Revenue from regulated markets grew by
18% (15% on a constant currency basis)
in 2023, primarily driven by a very strong
performance from Caliplay in Mexico, albeit
with a large outstanding debtor balance
(see Note 7 for more details). There was also
good growth from other regulated markets
such as Poland, Spain and Canada.
The Americas
The Americas saw rapid growth once
again, with 2023 revenue up 46% (35% on
a constant currency basis) compared to
2022. This was largely driven by another
strong performance from Caliplay as well as
growing contributions from other customers,
including NorthStar in Canada and Wplay
in Colombia.
US
We have dedicated significant resources
to establishing and growing the Group’s
presence in the US and we are pleased
with the progress to date. The Group has
taken significant steps to capitalise on the
favourable regulatory environment in the
US, and there remain multiple opportunities
ahead. Having signed deals with multiple
operators in 2022, 2023 was a year where
Playtech shifted its focus to executing on
those agreements.
Playtech plc Annual Report and Financial Statements 2023
15
Strategic Report
Chief Executive Officer’s review continued
B2B continued
Core B2B continued
Regulated markets continued
US continued
These products will also be supplied outside
of North America in addition to PAM+ and
services including marketing and operations.
As part of establishing our agreement
with HRD, Playtech invested $85 million
(€79.8 million) in exchange for a small
minority equity ownership stake in HRD.
In December 2023, Playtech completed the
first delivery milestone, after launching online
Casino slots and table and live dealer games
in New Jersey.
During the course of last year, the Company
also made good progress bringing its suite
of innovative content to even more states.
Adventures Beyond Wonderland Live Casino
was launched in the New Jersey facility in
July 2023, delivering the first true gameshow
experience to the American market, and
won the Gaming Product of the Year award
in the 2023 American Gambling Awards.
Mega Fire Blaze™ Roulette Live, a Playtech
Live Casino hit in multiple countries, has
opened in Michigan, while the Buffalo Blitz™
Live slot game has also launched in the US
in Michigan. In addition, at the end of 2023,
we launched a new Casino slot game in
the US called Gold Rush™: Cash Collect™,
based on the popular Discovery Channel
reality TV show. Gold Rush™: Cash Collect™
has already launched in multiple European
jurisdictions, proving successful.
Entry into new markets and high demand
for Live Casino content has led the Group to
expand its physical footprint considerably in
recent years. We were pleased to announce
that our third Live facility in the US was
opened at the end of 2023 in Pennsylvania,
adding to our New Jersey and Michigan
facilities, positioning us well for Live in all
three major iGaming states. Behind the
Company’s growing physical presence
are an increasing number of employees
focused on sales, operations and back-office
functions, taking total headcount in the US to
more than 200 at the end of 2023.
The evolution of the regulatory landscape
in the US continues apace. Since the repeal
of PASPA in 2018, numerous states have
approved legislation to legalise sports
betting. Many of these markets have already
launched in both online and retail channels,
with others expected to launch soon, while
in Florida, progress is being made in relation
to mobile sports betting.
Online casino, which was not subject to
PASPA, is allowed at the discretion of
individual states. In 2023, Rhode Island was
the only state to authorise online casino,
taking the total number of regulated iGaming
states to eight including Nevada (poker only).
In memoriam: Jonathan Richter
It is with great sadness that we lost our
dear friend, Jonathan Richter, who was
one of Playtech’s very first employees.
Tragically, Jonathan was one of the
many victims of the 7 October terrorist
attack in Israel. He was attending
the music festival supporting ELEM,
a nonprofit committed to improving
the lives of at-risk youth all around
the country.
Jonathan played a pivotal role in
making Playtech become a global
leader in its field, establishing and
managing the casino and content units
for over a decade. Jonathan was a
kind and generous person who cared
deeply about peace, having lived
a life full of community service and
dedicating much of his personal time
to volunteering.
Jonathan’s legacy is a fundamental
part of our story, and we will always
remember and cherish his contributions.
However, there are several states where
iGaming legislation is being considered.
Playtech now holds licences in 11 US states
which include recent licence approvals in
Maryland, West Virginia and Delaware.
Canada
We are delighted with the positive start to our
expanded partnership with NorthStar, which
saw strong revenue growth in 2023, albeit
from a low base. The Company also made an
investment, initially by way of a convertible
debenture in December 2022, which
subsequently was converted into equity in
H1 2023. The agreement also expands the
scope of Playtech’s offering to NorthStar to
include operational and marketing services,
in addition to PAM+, Casino, Live, Poker and
Bingo solutions already launched. NorthStar
has since acquired Slapshot Media Inc.
to open up the Canadian market to the
NorthStar brand beyond Ontario, and raised
additional capital in H2 2023 from Playtech
and other investors to accelerate the growth
of NorthStar’s footprint across Canada.
Aside from NorthStar, Playtech has further
exposure to the Canadian market with more
than ten other operators and launched
with FanDuel, Entain via its SIA brand and
Jumpman, all for Casino and Live in Ontario.
Latin America
Latin America remains a hugely important
market and will be a key driver of growth
for the foreseeable future. Whilst there is a
large outstanding debtor balance, Caliplay
in Mexico continues to grow strongly.
As detailed at the interim results, revenue
from Wplay was impacted by certain
activities in the first half of the year. However,
the second half of the year saw very
strong growth in Colombia, and we remain
excited about the opportunity afforded
by the Colombian market, with Wplay
well positioned to grow its presence there
further in the years ahead.
Despite the significant
disruption from geopolitical
conflict during the year, our
talented colleagues have
continued to deliver for our
customers and we are truly
grateful to them all.”
16 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Having seen strong demand since opening
our first Live Casino facility in Peru in 2022,
last year we built and opened a second
studio in Lima. This second facility will ensure
we have the capacity to take advantage of
further favourable regulation and strong
growth in the region, such as in Brazil, in
the years to come. Several customers,
such as Wplay and Betano, have launched
tables in the new Live facility with positive
results so far.
We continue to see a shift towards regulation
across Latin America, including in Brazil.
2023 saw the country take a crucial step with
the President signing into law new legislation
for online and retail sports betting and online
casino at the end of 2023, and industry
expectations are for a launch at some
point in 2024.
Brazil is anticipated to be a significant,
high-growth market given its large population
and love of sports. Playtech is well positioned
to benefit given its exciting strategic
agreement with Galerabet, which migrated
its Sports product onto Playtech’s platform
in 2023. In addition to Galerabet, Playtech
also has exposure to Brazil via its other
B2B partners in the country and launched
with DoradoBet for both Casino and Live
in H2 2023.
Peru has recently enacted legislation and
published online gambling regulations for
sports betting and online gambling, which
are expected to come into effect in 2024, and
Playtech is well positioned, launching with
Atlantic City for Casino at the end of 2023.
Europe ex UK
In Europe ex UK, B2B revenue growth of
8% (8% on a constant currency basis) was
driven by strong performances in several
countries including Poland, Spain and the
Czech Republic. This was partly offset by
lower revenue from the Netherlands due to
increased competition and a strict regulatory
environment, and the loss of two retail sports
contracts in the year.
Elsewhere in Europe, there were several
exciting launches in both Spain and Italy. In
Spain, we saw Juegging and DAZNBET both
go live with Casino and Live, KirolBet with
Live, and Luckia and Platin Casino both with
Casino. In Italy, Leo Vegas and StarVegas
launched Casino and Live products and
Betway launched Live in the year. Playtech
also launched with Betway in the UK for
Casino. This demonstrates the versatility
and scalability of Playtech’s business model
and the trend to grow customer relationships
over time.
We were pleased to extend our contract
with the Polish state operator, Totalizator,
following a competitive public tender in 2023.
The contract, which sees PAM+ extended
for multiple years, illustrates the strength
of Playtech’s offering and our successful
strategy of partnering with leading brands
and institutions in newly regulated online
markets. In February 2024, Playtech also
announced that it won the tender via a
rigorous public procurement process to
become the partner for Live Casino for
Veikkaus, the Finnish state-owned and
monopoly operator.
We are also growing our Live Casino
infrastructure in Europe. Extensions to
facilities in Romania and the Netherlands
were completed in 2023, with the Les
Ambassadeurs casino extension in the UK
completed in early 2024, illustrating the
growing demand across the segment.
France saw regulatory developments in
2023, with discussions about the regulation
of the online casino market taking place with
various key French stakeholders. At present,
only poker, sports betting and horse race
betting are regulated within the online sector,
so the regulation of online casino would be
a positive for Playtech, particularly as we
have multiple customers already using our
poker product.
UK
UK revenue in 2023 was flat (1% growth on a
constant currency basis) compared to 2022
despite the impact of increased regulation.
Having called for evidence as part of its
review into existing gambling laws, the
UK Government set out its conclusions
and proposals for reform in a White Paper,
published in April 2023.
Currently, there is still some uncertainty
about the impact of each of the
Government’s proposals on the industry.
Whilst the Government has announced
the introduction of stake limits for online
slot games (£2 maximum stake for 18–24
year olds and £5 for all other customers),
several other proposals are still subject to
consultation or pending the publication of
consultation responses. The introduction of
Financial Risk Assessments (often referred
to as “affordability checks”), which must be
completed once customers have reached
a defined loss level, are subject to the
most uncertainty in terms of impact. Until
the specifics of any measures that will be
implemented and the precise mechanics
required to adhere to them are known, it is
difficult to assess the overall impact.
Playtech plc Annual Report and Financial Statements 2023
17
Strategic Report
Chief Executive Officer’s review continued
B2B continued
Core B2B continued
Regulated markets continued
UK continued
The UK remains an important market for
Playtech and its customers, as well as
being one of the largest and most mature
regulated markets in the world. Playtech
is already working with customers that
took pre-emptive measures in advance of
the publication of the White Paper and is
committed to supporting its remaining clients
as the proposals come into force.
Playtech is uniquely advantaged given its
market-leading technology and data, which
put safety and responsible gambling at the
centre of everything. The Company remains
heavily involved in discussions around safer
game design and will continue to be following
this next wave of regulation. This should
further cement Playtech’s reputation as the
go-to platform for regulated markets.
Unregulated
The Group’s strategy to focus on both
regulated and regulating markets includes
unregulated markets which are likely to
regulate in the future. Revenue from these
unregulated markets was down 19%
(-17% on a constant currency basis) versus
2022, with underlying growth in Brazil more
than offset by a decline in Asia, Canada and
South Africa.
Asia saw revenue declines compared to
2022 due to continued pressures in the
region. In Canada, Ontario transitioned
to being regulated and, as a result, some
revenue has shifted to regulated markets
while other operators have reduced
their exposure to the Canadian market.
As regulation progresses across Canada,
it will continue to add to the size of the North
American market opportunity.
The Company is also excited about the
potential of the South African market as it
takes steps towards regulating. At present, it
is a nascent but fast-growing market, which
permits sports betting and Live Casino and
Playtech launched Casino and Live products
with TsogoSun at the end of 2022.
B2B – driving growth through innovation
SaaS
As part of our strategy to grow B2B revenue
by €200–€250 million in the medium term,
Playtech is also looking to diversify its
revenue base through the SaaS business
model, which targets the long tail of
providers that don’t have access to PAM+.
At the FY 2022 results, we announced
a medium-term SaaS revenue target of
€60 million–€80 million, and we are pleased
to report that we are making very good
progress towards achieving this target, with
the SaaS business seeing revenue growth of
more than 50% in 2023 versus 2022.
We target growth by looking to increase our
wallet share with existing brands on our SaaS
platform, as well as attracting new customers
in both regulated and regulating markets.
Playtech launched over 100 brands in the
period, with notable progress in the US as
Rush Street Interactive launched in Michigan
and New Jersey. We now have more than
450 brands live since the launch of our SaaS
model in 2019.
As the SaaS model provides a low friction
method of exposing operators to Playtech’s
content, we have the ability to cross and
upsell other Playtech products over time.
Meanwhile, a broad range of customers
from multiple countries across different
product sets means our revenue base is
more diversified, ensuring our B2B revenues
are more resilient to any changes in our
operating environment.
Product developments
Online gaming has undergone significant
change in recent years. The combination
of Playtech’s strong technology, content
offering and market-leading position means
we are well placed to cater to the ever-
increasing demand to deliver new, engaging
and immersive entertainment experiences
for consumers. In August 2023, Playtech
announced the launch of Jumanji™ The
Bonus Level Live, a new game within Live
that combines cutting-edge technology with
the cinematic qualities of the famous movie.
Following a complex development process,
Jumanji™ The Bonus Level Live is the first-
ever Live game inspired by a Hollywood
blockbuster, marking a key milestone in the
gaming industry.
I am pleased we have
continued to make progress
in all areas relating to
sustainability including safer
gambling, diversity and
climate change.”
18 Playtech plc Annual Report and Financial Statements 2023
Playtech has a long history of launching
branded content, and the continued demand
for themed games inspired the launch of
Breaking Bad™: Cash Collect & Link™ in
December 2023 within Casino. The game
features all the show’s key talent and is part
of Playtech’s award-winning Cash Collect™
suite. Another exclusively licensed branded
game from the Cash Collect™ power suite
is Gold Rush™, which has been particularly
noteworthy as it achieved the fastest return
on investment in the history of Playtech
Casino for branded games, breaking even
just two months after launch.
In July 2023, Playtech also announced the
launch of Big Bad Wolf Live, an innovative
experience that combines a slot game with
elements of a Live experience, released
from Quickspin Live, the RNG arm of our
Live division. The game, which stands apart
due to its artwork and unique features, sets
a new industry standard for Live Casino
gaming. Having signed the exclusive US
rights to Family Feud (®/© Fremantle), one of
US television’s longest-running and highest
rated gameshows, Playtech expects to
launch a gameshow next year. Within Live,
there were also developments rolled out to
update the in-house video technology.
Finally, we were delighted that Playtech’s
Live product was recognised as a leading
solution in the industry, winning the EGR Live
supplier of the year for 2023, acknowledging
the achievements of its extremely
talented team.
B2C
Playtech’s B2C business spans Snaitech,
HAPPYBET, and Sun Bingo and Other B2C
operations. Overall B2C revenues grew
5% to €1,037.0 million (2022: €983.1 million).
Adjusted EBITDA grew 6%, rising to
€250.3 million (2022: €235.2 million).
Snaitech
Revenue from Snaitech in Italy increased
by 5% compared to 2022, while Adjusted
EBITDA also grew 5% versus 2022. This
overall performance saw differing dynamics
across the period, with a very strong start
to the year driven by pent-up demand
following the football World Cup, whilst being
partly offset by customer-friendly sporting
results in the second half of the year. The
retail segment saw revenue and Adjusted
EBITDA growth of 4% and 6% versus 2022,
respectively, and the online business saw
revenue and Adjusted EBITDA growth of 8%
and 4% versus 2022, respectively.
The Snaitech management team has taken
on responsibility for HAPPYBET and we are
seeing early signs of improvement across the
retail and the online segments. Within retail,
less profitable stores have been rationalised
in Germany with plans to open new shops
in 2024 underway. In online, work on
optimisation of the player bonus policy and
improvements in the approach to risk and
trading around the sportsbook are ongoing.
Sun Bingo and Other B2C
Sun Bingo and Other B2C saw 12% revenue
growth in 2023 to reach €73.4 million
(2022: €65.3 million) while Adjusted
EBITDA grew to €6.0 million, up from
€2.0 million in 2022. The primary reasons for
the improvement in performance were the
increased marketing spend at the end of 2022
around the time of the football World Cup,
resulting in higher revenue growth in 2023 at
a high contribution margin, in addition to more
effective marketing spend throughout 2023
and higher retention of customers due to
improved product user experience.
Responsible business
and sustainability
In 2023, we continued to execute against
our five-year sustainability strategy. I am
both proud and pleased to be able to report
progress across all our commitments.
• We strengthened our portfolio of safer
gambling technology and solutions under
Playtech Protect with the development
of personalised responsible gambling
journeys to help operators enhance safer
gambling interactions with their players.
Playtech was also awarded the Advanced
Level Three of the GamCare B2B Safer
Gambling Standard – the highest possible
level of award.
•
In 2023, Playtech also made progress
against its global target to reach 35%
female representation in leadership
positions by 2025. At the end of the
year, Playtech reached 30% female
representation amongst leadership
positions as compared to 26% in 2022.
In 2024, Playtech will continue to refine
its understanding of gaps in female talent
across the Group and take action to
increase female retention.
• We initiated our net zero by 2040 plan, and
in early 2024, the Science Based Targets
initiative (SBTi) approved Playtech’s
near-term science-based emissions
target, a 50.4% reduction in its Scope 1,
2 and 3 emissions by 2032. Playtech has
also committed to set long-term emissions
reduction targets with SBTi in line with
reaching net zero by 2040.
• We supported a wide range of charitable
and volunteering activities, exceeding
our community target set for 2025 by the
end of 2023, with over 160,000 people
engaged through community investment
and mental health programmes over the
past three years.
• We are honoured to be included in the S&P
Global Sustainability Yearbook 2024 for
our sustainability efforts. By championing
sustainability and operating responsibly,
we continually strive to make a positive
impact on our customers, colleagues,
communities and the environment.
•
In August 2023, we established a Global
Employee Benevolent Fund to provide
support to colleagues and their immediate
families who may encounter unforeseen,
severe, life-changing challenges.
Mor Weizer
Chief Executive Officer
26 March 2024
Strategic Report
Retail betting sales were up 15% versus
2022, driven by a strong performance in the
first half of the year as customers returned
to betting shops after the football World Cup
in the final quarter of 2022 (Italy was absent
from the tournament). This was partly offset
in the second half of the year due to the
impact of customer-friendly sporting results
in September and October, as has been
well flagged by peers across the industry.
Gaming machines revenue was flat versus
2022 as this business normalises post-
pandemic. At the Adjusted EBITDA level,
retail margins expanded 30 bps versus 2022,
with operating leverage on strong revenue
growth in H1 2023 partly offset by the
impact of customer-friendly sporting results
in H2 2023.
The online business followed a similar
pattern, seeing strong growth in the first half
of the year led by good performances across
sports betting and casino. The second half
of the year saw customer-friendly sporting
results impact both revenues and EBITDA
margins. The underlying performance of
the online segment remains healthy. The
underpenetration of this segment continues
to be a structural tailwind for the business,
with Snaitech well placed to benefit given
the strength of the brand, the continuous
improvements to apps and technology and
a broadening of its content offering.
As announced at the time of our interim
results in September 2023, Snaitech last year
acquired Giove Group, a well-established
betting operator in the Puglia region
(southern Italy), the integration of which has
now been completed. Giove holds licences
for both retail betting and online and directly
manages 18 betting shops. The acquisition,
while small, illustrates the appetite to grow
the Snaitech business in Italy.
In 2023, the Snai brand was ranked number
one in sports betting (retail and online
combined, as measured by GGR), which
is a testament to its consistently strong
operational performance and unique
brand identity.
HAPPYBET
HAPPYBET revenues were down 9% in 2023
compared to 2022, driven by a rationalisation
of retail sites in Germany. Adjusted EBITDA
losses narrowed to €9.8 million in 2023,
when excluding a €2 million historical
litigation settlement expense. Including the
historical litigation settlement, Adjusted
EBITDA saw a loss of €11.8 million
(2022: €-10.8 million).
Playtech plc Annual Report and Financial Statements 2023
19
Strategic Report
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.
Evolution of online gambling market growth rates following online regulation
Online growth rates moderate as regulation matures
MARKET
GROWTH
UNREGULATED
REGULATED
POINT OF ONLINE
LEGISLATION
Source: H2GC and Playtech estimates.
20 Playtech plc Annual Report and Financial Statements 2023
MATURITY OF REGULATION
Strategic Report
US
Latin America
State-by-state legislation in the US
The regulatory landscape in the US is ever progressing. Since the
repeal of PASPA in 2018, numerous states have approved legislation
to legalise sports betting. Many of these markets have already
launched in both online and retail channels, with others expected to
launch soon. In Florida, progress is being made in relation to mobile
sports betting, enhancing the future prospects of the Company in the
medium term given its landmark strategic partnership with Hard Rock
Digital (HRD).
Online casino, which was not subject to PASPA, is allowed at the
discretion of individual states. In 2023, Rhode Island was the only
state to authorise online casino, taking the total number of regulated
iGaming states to eight including Nevada (poker only). However, there
are several states where iGaming legislation is being considered.
A region trending towards regulation
Latin America has shown significant progress in regulating online
gambling in recent years. The focus in 2023 has been on Brazil, which
has now taken the crucial step towards regulation with the President
signing in law new legislation for online and retail sports betting and
online casino at the end of 2023 and industry expectations are for a
launch at some point in 2024. Peru has recently enacted legislation
and published online gambling regulations for sports betting and
online gambling, which are expected to come into effect in 2024.
Chile is also in the process of approving an online gambling bill, which
was filed in March 2022 and is expected to pass in 2024. Elsewhere,
in Argentina, the Santa Fe province should join already regulated
Buenos Aires, Mendoza and Cordoba, after the Senate approved the
Bill at the end of 2023.
Current US state-by-state regulatory landscape
Regulation is the biggest market driver in the short term
Several countries in LatAm with large
populations and GDP
Significant opportunity in LatAm
Country
Brazil
Mexico
Colombia
Argentina
Peru
Chile
Guatemala
Costa Rica
Panama
Population
GDP ($ million)
215,000,000
1,920,000
128,000,000
1,466,000
52,000,000
344,000
46,000,000
34,000,000
20,000,000
17,000,000
5,000,000
4,000,000
631,000
243,000
301,000
95,000
69,000
77,000
States that offer only sports betting
States that offer both sports betting and iGaming
Source: VIXIO.
Source: Worldometer, World Bank.
Playtech plc Annual Report and Financial Statements 2023
21
Strategic Report
Market trends continued
1) A super-cycle driven by a trend towards regulation continued
Europe
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 less than 10% in 2023 driven by a
combination of declining Asia revenues and accelerated growth in
other regions and regulated markets.
Africa
The proliferation of regulated online gambling in Africa has
been limited in the past due to unreliable and inconsistent digital
infrastructure. However, in recent years, online penetration rate has
increased notably to reach 48.2% in 2023.
South Africa: a large market with an established regulatory
framework
South Africa represents one of the largest online gambling markets
in Africa, valued at $1.1 billion GGR and projected to reach $2.9 billion
by 2028 as per H2GC. The online sportsbook market is regulated
with local licensing, whilst iGaming is only permitted in two provinces:
Western Cape and Mpumalanga. Playtech has been actively
exploring the South African market since 2022, establishing a
presence via partnerships with key operators such as TsogoSun and
Hollywood Bets.
Europe – a mix of newly regulating and mature markets
The market in Europe is more nuanced than the Americas region. On
the one hand, there are countries that are moving towards regulating
their online market such as France and Germany, while others are
mature but still have an underpenetrated online market, such as
Italy and Spain. And finally, there is the UK, which is the most mature
market of all with high online penetration rates.
Germany
Germany’s regulated online gambling and sports betting market
continues to expand as the number of licensed operators approaches
100 since the introduction of the regulatory framework in July 2021.
Despite the notable progress, the operating environment remains
challenging for regulated operators due to stringent rules and limited
enforcement that encourages competition from off-shore operators.
In 2023, licensed operators were increasingly vocal about the need
to modernise the rules, that do not include online casino-type games,
especially around the €1 cap per spin in online slot bets and €1,000
per month per player online deposit limit.
France
France saw regulatory developments in 2023, with discussions about
the regulation of the online casino market taking place with various key
French stakeholders. At present, only poker, sports betting and horse
race betting are regulated within the online sector, so the regulation of
online casino would be a positive for Playtech, particularly as we have
multiple customers already taking our poker product.
UK
There continues to be some uncertainty around the impact of
the White Paper on the industry. The proposals have not resulted
in changes to legislation or regulation just yet, and are subject to
consultation with various stakeholders, the timing of which is unclear.
The introduction of Financial Risk Assessments (often referred to
as ‘affordability checks’) which must be completed once customers
have reached a defined loss level, are subject to the most uncertainty
in terms of impact. The Government’s White Paper recommendation
that these checks be frictionless is positive, as is the Gambling
Commission’s commitment to pilot these checks first in order to
ensure that they can be completed without friction. However, until the
specifics of any measures that will be implemented and the precise
mechanics required to adhere to them are known, it is difficult to
assess the overall impact.
2) Growing requirements to use data analytics for player protection
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.
The development of tools and software, and new technologies,
including the use of generative AI, is increasingly being used
to provide new and innovative ways for the sector to ensure
player safety.
22 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
3) Technology – multiple technologies about to hit mainstream adoption
Virtual reality/
augmented reality
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 roll-out
Overview
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.
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Data and AI
Overview
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 AI 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
AI 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 AI capabilities, 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.
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Playtech plc Annual Report and Financial Statements 2023
23
Strategic Report
Market trends continued
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:
• shift to in-play betting and micro betting
with the types of bets becoming more
granular and over a shorter time frame;
• convergence of sports betting, media
streaming and social;
• emerging markets shifting towards
embedded betting within streaming
services; and
• more and more data sources being used to
come up with sports betting odds such as
fitness of players.
Impact on the 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.
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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 $15.8 billion based on GGR by 2028,
up from $7.9 billion in 2023, a CAGR of 15%.
Impact on the industry/Playtech
Playtech has already made significant
investments to capitalise on this attractive
product vertical:
• 12 studios are currently operational with
Pennsylvania having opened at the end of
2023. A second studio in Peru was opened
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 great
content such as Jumanji™ and Big Bad
Wolf Live, two flagship games that were
launched in 2023.
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.
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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 while at
home. Given online penetration in 2023 has
remained above 2019 levels for all major EU
countries, with the exception of Spain, we
think it is safe to conclude that the migration
to online has remained sticky post pandemic.
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 2023 was 59%, far in excess of
Spain, Italy and Germany.
Impact on the 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 30%, far below the UK at 59%. In addition,
the online business is higher margin and less
capital intensive, meaning it generates higher
return on capital employed. 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 the
online channel.
Several large European countries
have an underpenetrated
online market
Online penetration as % of GGR
UK
55
59
France
28
35
Spain
Italy
Germany
23
22
15
15
30
20
2019
2023
Source: H2GC (includes betting and
gaming and excludes lotteries).
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24 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Playtech plc Annual Report and Financial Statements 2023
25
Strategic Report
Market trends continued
Americas: the land of opportunity
US
With a well-established presence in the US including three Live
studios operational and multiple brands including Hard Rock
Digital, Playtech is well placed to take advantage of the huge
opportunity in the US market.
The opportunity
The United States of America is the
world’s largest online gambling market,
which is projected to reach $41 billion in
GGR by 2030. Regulation is the single
biggest market driver in the short term,
and Playtech continues to see positive
legislative momentum in the US. Since the
repeal of PASPA in 2018 more than 35 states
have legalised online sports betting, whilst
iGaming is currently regulated in eight states.
According to industry forecasts, the online
gambling market in the US will continue to
display a strong growth profile with a CAGR
of more than 20% in both sports betting and
iGaming segments out to 2030.
$41bn
Size of the US market over the long
term based on GGR
3Live studios operational in the US
How we are exposed
Playtech recognises the unmissable growth
opportunity offered by the US market
and continues to proactively invest in the
infrastructure and operational capabilities
to accelerate the Group’s presence. Our
strategy centres around iGaming, where
we have extensive experience and are
recognised for our leading market content.
Having signed agreements with multiple
operators as well as a comprehensive
structured agreement with Hard Rock
Digital, we are well placed in the US. Our
infrastructure includes three Live studios,
and over 200 colleagues based in the US.
26 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Canada
A growing market with attractive player economics, Canada
is fast proving to be a key market for Playtech. With our
comprehensive structured agreement with NorthStar, Playtech
is well placed to benefit as states regulate in the coming years.
The opportunity
Canada is home to a rapidly growing online gambling market, which
is projected to nearly double in size to $6 billion by 2028, driven by a
favourable regulatory environment and attractive market economics.
The industry is regulated on a province-by-province basis, with Ontario
leading the way to become the first regulated province in April 2022. Total
player value is showing impressive momentum, while ROI and cost-per-
acquisition metrics are also trending favourably.
How we are exposed
Playtech is well placed to benefit from the on-going expansion of
Canadian market via a comprehensive structured agreement with
a prominent local operator NorthStar as well as more than 10 other
operators and launched with FanDuel for Live in Ontario.
$6bn
Size of the Canadian market over the long term based on GGR
Brazil
As this hugely attractive market continues to move towards
regulating, Playtech is well positioned for success in the rapidly
evolving Brazilian gambling market via its partnership with
Galerabet and other B2B customers.
The opportunity
Brazil is a global economic powerhouse, is deeply passionate about
sports and now home to one of the most exciting markets in gambling.
Brazil’s large population of 215 million and promising regulatory
environment make it an exceptionally attractive market opportunity,
with online sports betting and casino expected to reach $5 billion
GGR in the next five years.
How we are exposed
Playtech is well positioned for success in the rapidly evolving Brazilian
market via its partnership with Galerabet and several other B2B
customers. In 2021, Playtech and Galerabet signed a structured
agreement aiming to combine advanced gaming technology and
expert knowledge of the local market in anticipation of the regulation
in the Brazilian market. Galerabet is building a strong brand identity
through sponsorship agreements with the prominent local sporting
brands including the Brazilian Football Confederation and the
Brazilian Basketball Confederation.
$5bn
Size of the Brazilian market over the long term based on GGR
Playtech plc Annual Report and Financial Statements 2023
27
Strategic Report
Business model
Flexibility to capture
every opportunity
Conventional
Structured agreement
SaaS
• Entain
• Bet365
• Parx
• Flutter
• 888
• BetMGM
• Caliplay
• Wplay
• Galerabet
• NorthStar
• Hollywoodbet
• Novibet
• LeoVegas
• SkillOnNet
• Betway
• DOXXbet
B2B
Services
Content
Platform
Clients
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
Player Account Management + (PAM+) offering. The operator
can then choose from a wide range of product verticals and
content, including Live, Casino, Sports, Bingo and Poker.
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.
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.
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
PAM+ 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
PAM+ platform
Engagement Centre
Player management
Wallet
Payments
Risk/KYC/AML
Safer gambling
Payments
Risk/KYC/AML
Safer gambling
Playtech provides/subcontracted
Operator provides
28 Playtech plc Annual Report and Financial Statements 2023
How we work
Strategic Report
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.
B2C
Snaitech
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
50%–55%
Staff, rent and facilities
Licence holder
45%–50%
Licence, brand, content, technology, trading and risk
Platform/
machine owner
20%–25%
Machine installation and maintenance;
hardware, software and content
Location owner
50%–55%
Security, location costs and staff
Licence holder
20%–30%
Licence
Sports
betting
Gaming
machines
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 owner
Affiliates/retail
sites
10%–15%
Platform and content
20%–25%
Customer acquisition
Licence holder
60%–70%
Licence, tech, trading, risk and customer services
Playtech plc Annual Report and Financial Statements 2023
29
Strategic Report
Business model continued
Our strengths
1
2
3
Unparalleled scale
Playtech has a vast reach, with over 180
licensees operating across more than 40
regulated markets and offices in 19 countries.
Given this scale, the data, knowledge and
expertise that Playtech leverages enable it
to improve product design, develop cutting-
edge safer gambling tools and support
regulatory requirements of operators in
various jurisdictions.
Award-winning
technology
Playtech has a strong track record of
innovation and content creation. Thanks to
our scale, we’re able to invest heavily in R&D
and product-related innovations, allocating
significantly more funds towards these efforts
than our competitors. In fact, over the past
five years alone, we’ve dedicated more than
€720 million to support the development of
our cutting-edge technological platform.
€720m
Amount invested in R&D over the
last five years
Flexibility to cater to
almost any operator
Playtech’s comprehensive B2B technology
offering covers the entire gambling value
chain with all products integrated into the
PAM+ platform. Playtech also boasts one of
the industry’s broadest content portfolios,
available even without having to deploy PAM+,
as well as access to third-party content via
Playtech Open Platform (POP).
30 Playtech plc Annual Report and Financial Statements 2023
4
5
6
Leader in highly
attractive Italian market
Playtech’s Italian B2C business, Snaitech, is
a market leader in the lucrative Italian market.
The online segment has seen significant
growth at a CAGR of 20% between 2019 and
2023, yet it remains less developed than
retail, with online penetration at only 30%
(versus 59% 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.
€17bn
Size of Italian retail and online
market in 2023 (GGR)
Our incredible people
Playtech’s people are truly exceptional.
They are talented, dedicated and passionate
about their work. They invest their time and
expertise in the Company. In return, Playtech
provides a fun, creative, rewarding and
inspiring working environment. We constantly
invest in and reward our talent, which has
helped us to become the world’s leading
gaming business, employing over 7,700
people across offices in 19 countries.
Focus on sustainability
At Playtech, we are committed to growing our
business in a way that has a positive impact on
our people, our communities, the environment
and our industry. Advancing safer gambling and
player protection technology is a key priority.
Through our safer products, data analytics and
player engagement solutions, we are keeping
players safe and helping our licensees succeed
in regulated and fast-moving markets.
Strategic Report
Supporting our stakeholders
For customers
€163m
Amount invested in cash
R&D including safer
gambling initiatives
For employees
>7,700
Colleagues
76mNumber of
poker tournaments
>250
Number of
wellbeing initiatives
For society and the environment
38.6%
Reduction in CO2 emission since
baseline 2018
>110
Number of charities
and community
organisations supported
For shareholders
€383m1
Adjusted operating cash flow 44Point improvement in S&P
Global Corporate Sustainability
Assessment since 2020
1
Adjusting for changes in jackpot balances, security deposits and client funds,
professional fees and ADM security deposit.
Playtech plc Annual Report and Financial Statements 2023
31
Strategic Report
Strategic Report
Product and innovation
Providing market-leading
solutions through Playtech’s
bespoke technology
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
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c
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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
Portal
Native apps
Retail machines
Playtech Open Platform
PAM+ platform
Playtech Protect
Retail till
l
A
n
a
y
t
i
c
s
32 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Playtech’s bespoke end-to-end technology platform
is built with four key aims at its heart
Playtech was the original pioneer of the end-to-end technology offering we see across the gaming industries today. Even in the face of
established and emerging competition, and the prolific creation of new content and technologies, Playtech remains a major player due to the
breadth of its offering and the scale of its customer base.
In response to these challenges, Playtech is building the next generation of products to bring new types of experiences to market across its
verticals, including Live and Casino. Through continued investment in technologies and expertise, Playtech gives its licensees a unique and
bespoke end-to-end service, with a scale that is unmatched in the industry. Playtech remains committed to investing in technology across the
entire business, from sports betting to poker, knowing that valued partnerships are based on trusted technology. Our end-to-end technology
offering is underpinned by the four key pillars below.
End-to-end technology
Unparalleled
breadth
Agility and
accessibility
Safety and
security
Data-driven
innovation
Playtech has been
delivering pioneering online
gaming technology to
operators for over 20 years.
In that time, we have built a
breadth of experience and
expertise alongside the
most diverse technology
and content offering across
gambling verticals.
Example:
BetBuddy is now fully
integrated into our Player
Account Management+
platform providing an
innovative capability
to apply personalised
responsible gambling tools
on an individual player
basis based on dynamically
calculated risk levels.
Our award-winning
platform, the Player
Account Management
+ (PAM+), showcases
Playtech’s technological
edge by utilising modular
structure to achieve best-
in-class customisation and
scalability. PAM+ allows
operators to have full
visibility and control of the
entire player lifecycle from
one centralised point for all
operational needs.
Example:
In 2023, we launched key
player activity timelines, a
visual display for key player
events to help licensees
quickly identify potential
issues or behaviour
patterns, reducing analysis
and resolution time.
Playtech’s valued
partnerships rely on the
trusted technology and
security infrastructure
that is safeguarded and
protected. As a result,
we are continuously
investing in security and
privacy initiatives. We have
allocated £720 million into
R&D expenditure as part of
our operations since 2019.
Example:
With connectivity lines
stretching from Brazil to
Canada and data centres
covering over 50 locations,
we’re redesigning and
modernising our entire
infrastructure to bring
networks closer to
our partners.
Data continuous to
play a central role in our
decision making and
innovation process.
We actively utilise our
superior data-driven
insights, analytics
capabilities and
artificial intelligence to
drive innovation.
Example:
Our central cloud data
platform gives operators
access to in-depth analytics
and benchmarked KPIs to
customise, reshape and
refine their data insights to
enable operators to assess
and improve various areas
of their business.
Playtech plc Annual Report and Financial Statements 2023
33
Strategic Report
Product and innovation continued
Platform
PAM+
Our offering
Playtech’s Player Account Management + (PAM+) is the
power behind Playtech’s products, providing all the tools
necessary to successfully run and manage every aspect
of a licensee’s business.
PAM+ 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. PAM+ 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
PAM+ platform.
239 billion
Wallet transactions processed in PAM+ in 2023
Sitting within the PAM+ platform
2023 highlights
• Launch of player activity timeline, a visual display for key player
events at a glance, to help licensees quickly identify potential issues
or behaviour patterns, reducing analysis and resolution time.
• Free Spins 2, a new upgrade to our Free Spins bonus system, was
launched. Licensees now have the option to regulate the value of
free spins sent to players, who can then choose one of the possible
combinations of the number of free spins and their value.
• Report Viewer 3 brought a modern intuitive UI with improved
accessibility, report/configuration search, and new functionalities
that make the overall reporting experience smoother.
•
•
Integration with checkin.com was implemented for optimised
player onboarding and verification.
In response to new reporting, regulatory and responsible gambling
requirements in the Netherlands and Spain, we made several
changes to ensure compliance.
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 PAM+.
PAM+
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.
34 Playtech plc Annual Report and Financial Statements 2023
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.
Strategic Report
Engagement Centre
Playtech Engagement Centre
Part of the PAM+ 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.
2023 highlights
•
•
In a major milestone, Sportsbook was integrated with Player
Journey to take full advantage of Playtech’s engagement tools
for Sports customers and increase the value of Playtech’s
PAM+ platform. Licensees can now create cross-sell journeys,
leaderboards and Missions promotions based on a wide variety
of sports-based parameters, including in-play bets and different
bet types and markets, and players can be rewarded with sports
bonuses and free bets.
Introduction of Missions, a new promotion type that challenges
players to complete various tasks in exchange for rewards. The
tasks can range from playing a specific game to betting a certain
amount, or hitting a big win, while the rewards can be bonuses, free
spins or even real prizes. Missions can be configured to reward
players for actions taken across Playtech products including
Casino, Live Casino and Sports, or external licensee events,
thereby increasing operators’ ability to cross sell.
When to engage?
Market automation
Who to engage with?
Data-driven
segmentation tools
Brings together all
the engagement
elements of
PAM+ across all
product verticals
What to provide?
Player rewards
How to engage?
Communication tools
25%
Increase in new licensees using leaderboards
(including Missions) in 2023 versus 2022
106%
Growth in average daily engagement
campaigns across the platform
Safer gambling
Our offering
Highlights in 2023
BetBuddy is our ground-breaking responsible gambling
(RG) analytics platform, built around data mining and
predictive analytics.
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.
• BetBuddy has expanded into three new jurisdictions in 2023,
having been adopted by clients in Sweden, Italy and Rest of
Canada. At present BetBuddy is integrated across 9 jurisdictions
and 16 brands.
• BetBuddy is now fully integrated into our PAM+platform
providing an innovative capability to apply personalised
responsible gambling tools on an individual player basis
based on dynamically calculated risk levels. The information is
displayed in a user-friendly Power BI dashboard format providing
a comprehensive overview of each player’s RG status and a
snapshot of the RG limits usage.
• Work has begun on the third iteration of BetBuddy (v 3.0), which
promises to deliver even more exciting features, including
improved segmentation tools, a dedicated sports betting model,
and a holistic single customer view. The update also includes a
new risk assessment model capable of calculating real-time RG
risk scores. This enhancement is currently operational across
seven brands in two jurisdictions and has received outstanding
feedback from operators.
Playtech plc Annual Report and Financial Statements 2023
35
Strategic Report
Product and innovation continued
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 five main verticals along with highlights in what
has been an exciting year.
Our offering
2023 highlights
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 12 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 Adventures Beyond Wonderland
Live, The Greatest Cards Show, K-Pop Roulette, Everybody’s Jackpot
Live, Quantum Blackjack, Buffalo Blitz™ Live Slot and others.
36 Playtech plc Annual Report and Financial Statements 2023
In 2023, Playtech’s Live vertical exhibited a strong growth
trajectory, driven by diversification of content and significant
expansion of studio space.
In the year, we expanded our flagship games portfolio to include
popular brands such as Jumanji™, whilst also extending the hugely
popular Mega Fire Blaze™ franchise to include Mega Fire Blaze™
Blackjack Live and Mega Fire Blaze™ Lucky Ball. We also launched
Big Bad Wolf Live, an innovative experience that combines a slot
game with elements of a Live experience, released from Quickspin
Live, the RNG arm of our Live division.
• Continuing to invest in branded content, the Company signed
the exclusive US rights to Family Feud (®/© Fremantle), one of US
television’s longest-running and highest rated gameshows, and
expects to launch a gameshow next year.
• We’ve also continued to develop our proprietary in-house video
technology and encoders to deploy high quality video features
and work has begun on a third generation video delivery platform.
Playtech’s Live product has been recognised as a leading solution
in the industry, winning the EGR Live supplier of the year for 2023,
acknowledging the achievements of its extremely talented team.
• Expansion of our studio capacity continues to remain a priority.
A new studio was opened in Pennsylvania, US, as well as a second
one in Lima, Peru, thus ensuring we can take advantage of the
strong growth within the Americas region.
3Number of Live US studios fully operational
Strategic Report
Our offering
2023 highlights
Playtech Casino offers one of the industry’s most extensive range
of “game of chance” based online slot games, delivering over 1,100
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.
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.
•
•
In 2023, the Playtech Casino vertical reached new heights of
success, thanks, in part, to our ongoing commitment to the “Power
Suite” strategy. This approach combines the most advanced slot
design and mechanics with a unique narrative, appearance and feel
designed to captivate players and establish a strong brand identity.
In 2023, we launched 65 new games including Dragon Bonanza,
a highly popular fantasy slot game that combines distinctive
design with attractive prize mechanics. Branded content was also
launched, with a highlight being a new brand partnership with Sony
to release a new Cash Collect™ slot game based on the iconic TV
series Breaking Bad™, as well as Rocky™, a fast-paced feature
action game starring Rocky’s three greatest opponents – Apollo
Creed, Clubber Lang and Ivan Drago.
• Aside from content, Playtech has rolled out several features,
including Missions, a new promotional feature in Casino
strengthening the platform capabilities, and free spins 2, a long-
awaited upgrade to Playtech’s offering allowing licensees to give
players even more flexibility with how they use their free spins.
These high-quality roll-outs have helped to increase the level of our
feature adoption with tier 1 customers, with Holland Casino, Bet365
and Sky all using these features.
Playtech plc Annual Report and Financial Statements 2023
37
Strategic Report
Product and innovation continued
Purpose-driven content:
changing the way people experience gambling entertainment
As online gaming evolves, Playtech continues to satisfy the ever-increasing demand to
deliver new, engaging and immersive entertainment experiences for consumers.
Continued investment in branded content
Live: Jumanji™
The Bonus Level
Launched in August 2023, Jumanji™ The Bonus Level
combines cutting-edge technology with the cinematic
qualities of the famous movie. Following a complex
development process, Jumanji™ The Bonus Level
is the first-ever Live game inspired by a Hollywood
blockbuster, marking a key milestone in the gaming
industry. This game is housed in a studio designed to
immerse players in the world of Jumanji. The studio’s
attention to detail ensures that the game replicates
the authenticity of the original movie, delivering a 24/7
theme park-like experience.
A feature bonanza
Casino: Rocky™
Playtech’s latest Rocky™ game was launched in
2023, delivering a fast-paced feature action with
an innovative 25-reel main game and six features
to play - one for each Rocky movie. The game stars
Rocky’s three greatest opponents – Apollo Creed,
Clubber Lang and Ivan Drago – and the gameplay
variety packs a punch, providing entertainment
value for players.
38 Playtech plc Annual Report and Financial Statements 2023
Casino: Dragon Bonanza: Gold Hit™
Dragon Bonanza, Playtech’s third Gold Hit™ game, utilises our
revamped respins feature and incorporates our latest promotional
tool, Missions, to drive player engagement, both of which have been
extremely well received by operators.
Strategic Report
Cash Collect™ reaching new heights
Casino: Gold Rush™:
Cash Collect™
The success of Gold Rush™, an exclusively licensed branded game from
Playtech’s Cash Collect™ power suite, has been particularly noteworthy,
as it achieved the fastest return on investment for a branded game in
the history of Playtech Casino, breaking even just after two months post
launch, compared to the traditional breakeven timeframe of six months.
2 months
Breakeven period: fastest ever payback period
for branded game in Playtech Casino’s history
Casino: Breaking Bad™:
Cash Collect & Link™
Breaking Bad™: Cash Collect & Link™, launched in
December 2023, features all the show’s key talent and
is part of Playtech’s award-winning Cash Collect™ suite,
which already includes successful branded games based
on The Walking Dead™ and the popular reality show Gold
Rush™. Cash Collect & Link™ is a new twist on the original
suite format, with Mega Link symbols creating major win
potential in the Hold & Respin round.
Combining the best elements of Live and RNG
Live: Big Bad Wolf
Big Bad Wolf Live is an innovative experience that
combines a slot game with elements of a Live
experience, released in 2023 from Quickspin Live, the
RNG arm of our Live division. The meticulous attention to
detail, pristine art and many exciting gameplay features
will keep players on the edge of their seats, and sets a
new industry standard for Live Casino gaming.
Playtech plc Annual Report and Financial Statements 2023
39
Strategic Report
Product and innovation continued
Content continued
Our offering
Our offering
Playtech Sports delivers a full range of sports betting technology,
managed trading services, self-service betting terminals (SSBTs),
kiosks and over-the-counter systems, catering to online operators
and traditional retail/betting shop businesses of all sizes in major
regulated markets worldwide.
Playtech Sports boasts a wide distribution, with around 620 million
sports bets placed via our technology on more than 580,000 real
events in 2023, which makes us one of the largest B2B Sportsbook
providers in the world. Including Snaitech, Playtech has c. 70,000 bet
entry points live in retail locations worldwide, including kiosks, 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.
2023 highlights
• Playtech’s Sports vertical made good progress in 2023, building on
the product modernisation initiative carried out in the previous year. We
successfully migrated Galerabet from its previous platform onto our
Sports product, positioning us well in the emerging Brazilian market,
where the sports betting total addressable market is projected to reach
$3 billion in the next five years. Aside from Brazil, we are particularly
strong in Latin America, where we continue to benefit from the success
of our structured agreements with Caliplay in Mexico, Wplay in
Colombia and Betcha in Panama.
•
In Canada, we launched with NorthStar outside of Ontario to ensure
it is well placed to benefit as the Canadian market regulates over the
coming years. South Africa remains a priority for 2024 and beyond,
given the sizeable opportunity as this market opens up.
• From a product perspective, we have made good progress in adding
features that are more tailored to the US market such as Bet Builder
and Same Game Parlay for NFL, while also broadening our offering of
US sports to now include even more player props and micro markets.
Our Sports product is now integrated with player journey within the
PAM+, allowing operators to deliver a more personalised experience
to their players, leading to higher engagement and stronger retention.
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
450,000 players a month during 2023. Marketing and engagement
tools such as 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.
2023 highlights
• Playtech’s Poker vertical has continued its record-breaking spree in
2023 following the strong performance of the online poker market
post the COVID-19 pandemic. Three new operators joined Playtech
throughout the year resulting in a 32% year-on-year increase in the
average number of players per month.
• To support our growth, we continuously strive for product innovation
across game features, promotions and ancillary activities. In 2023,
we launched Mystery Bounty Tournaments, a highly popular
modification designed to add an extra dose of surprise by offering
generous hidden prizes for elimination of opponents. Additionally,
we introduced Poker Bingo, a fun and engaging side game that
presents players with greater opportunities to win rewards without
making additional bets. To top it off, Playtech now offers embedded
poker tools to track key player statistics, available to all players
free of charge.
•
In 2023, we have taken player experience to the next level by
relaunching our iPoker native mobile app. The revamped app offers
an innovative new look and feel, which introduces more promotional
space, interactive interfaces, and a wide range of customisable
image effects and animations.
40 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Our offering
Playtech’s innovative omni-channel Bingo solution offers players a
consistent and streamlined experience across any device or platform,
including retail, all through a single wallet and a single account.
Our UK bingo network consists of more than 19 brands and manages
57,000 daily players and close to 18,000 daily concurrent players.
2023 highlights
•
In 2023, amidst a challenging market, Playtech has focused on
modernising and relaunching its Bingo product. The latest update,
due to launch in early 2024, has greatly improved the client interface
and customisation features. The renewed design, supported by a
modernised tech stack and a new front-end interface, now offers
a more vibrant and engaging user experience, positioning the
product to appeal to a wider audience.
• The new platform not only benefits end users, but also greatly
accelerates product development and enables the rapid launch of
innovative marketing features such as jackpot escalations and chained
promotions. By leveraging these tools, along with the new lobby
banners, operators can attract and engage players more effectively.
As a result of these improvements, we have observed an increase in
the level of interest shown by our existing and prospective clients. We
have renewed our agreement with Buzz Bingo, extended our contract
with Sky Bingo, and secured an agreement with a major Dutch
operator, NLO. Armed with a revamped Bingo product, we are now in
a good position to capitalise on growth opportunities in key regions
such as the US and Latin America.
AI and data
2023 saw a record Bingo game with
users and
c.23,000
c.1,100,000
tickets sold
Business intelligence technology (BIT) and artificial
intelligence (AI) provide powerful insights
automated insights into players’ behavioural patterns to create
a personalised gaming experience.
Playtech’s new cloud data platform allows data analytics and insights
in all domains from product and cross- product KPIs to player
behavioural analytics.
We also offer the ability to segment players and personalise
communication, based on their behaviours, using analytics and AI
to improve player experience.
This new data platform embodies a data mesh architecture allowing
all Playtech products and units to unify their data onto a single
platform, bringing efficiency and capability improvements whilst
enabling new cross-product analysis and insights.
Our data democracy vision starts with putting the right data into
the hands of Playtech staff, but then swiftly moves to providing this
same data and analysis to our customers. This provides not just
comprehensive KPI dashboards (81 to date), but also includes more
advanced analytics such as market benchmarking (an exercise that
a single Playtech customer is unable to carry out).
Playtech’s data-driven business intelligence technology significantly
enhances licensee revenues by increasing insight, improving player
experience and increasing lifetime value. Added AI functionality
gives licensees the tools to analyse big data and leverage real-time
2023 highlights
• New single data portal with comprehensive, interactive dashboards
for business KPIs and advanced analytics. Customers can also
construct their own bespoke dashboards based on the same
shared, anonymised datasets that Playtech uses.
• New cloud-based data mesh architecture empowers all Playtech
products to bring their data to the same collaborative platform,
enabling improved internal efficiency, and reduces total BI cost
of ownership through retiring legacy per product analysis tooling.
• New player analytics tooling made available to licensees –
providing analytics on exactly how players are interacting with
gaming products for the first time.
Playtech plc Annual Report and Financial Statements 2023
41
Strategic Report
Product and innovation continued
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 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.
Technical
delivery services
Delivering the
necessary back-
office configurations
in PAM+ to ensure
operators optimise
Playtech’s technology.
Payment 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.
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 colleagues
alike can access 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.
42 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
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 PAM+ 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 450 brands since launching the SaaS offering.
>450
Brands added since launch of the SaaS offering
Broad range of available
third-party integrations
Playtech provides operators with access
to specialist services and software from
carefully selected third parties. These
partners offer products and services
that complement or enhance Playtech’s
existing systems, giving operators a richer,
more complex set of tools to achieve their
business objectives, while not having to go
through an integration process.
>45Available third-party solutions
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 its 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.
Playtech’s 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
Playtech plc Annual Report and Financial Statements 2023
43
Strategic Report
Stakeholder engagement
Considering all stakeholders
in our decision making
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.
44 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Colleagues
Why we value them
Shareholders and bondholders
We recognise our colleagues 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 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.
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 2023
• Flexibility, autonomy and being able to work from home
• Capital allocation priorities
• Communication about strategy and priorities
• US and Latin America strategy
• Recognition, continuous feedback, and learning and development
• Capturing the market opportunity in Italy and within Live
• Employee wellbeing, work-life balance and career progression
• Ongoing litigation with Caliplay
• Competitive remuneration and benefits
• Corporate governance
• Rising cost of living
• ESG strategy and progress on safer gambling, climate and diversity
and inclusion
How the Board and management engage and respond
•
Implementation of a new Centre of Excellence function within HR,
focusing on talent acquisition, learning and development, and
diversity, equity and inclusion
• Series of town halls and office visits with a structured and informal
format to:
• Understand and listen to the ideas, issues and concerns
•
Increase awareness and understanding of the corporate strategy
and priorities
• Establish meaningful, two-way engagement with colleagues
• Foster a culture of listening, openness and consultation
• Ensure colleagues are aware of actions as a result
of engagement
• Global engagement survey supported by action plans
Read more on pages 60 to 69
• Annual Report and AGM
• Structured programme of communication between the Company
and investors and analysts
• Results presentations and post-results engagement with
major shareholders
• Capital Markets Days and analyst site visits
• Board receives regular updates on investor relations
• Engagement with ESG indices
• Chair of the Remuneration Committee engages with shareholders
on Remuneration Policy and practice
Playtech plc Annual Report and Financial Statements 2023
45
Strategic Report
Stakeholder engagement continued
Licensees and customers
Suppliers and
technology partners
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.
Our suppliers and technology partners play a crucial role in
supporting our operational excellence as well as the success
of our commercial teams, our 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 2023
•
Innovation across content, products and platform
• Complexity and speed of onboarding process for new suppliers
• Data protection
• Service reliability and scalability
• Compliance
• Competitive pricing
• Solutions and support to meet and anticipate regulatory
developments and sustainability topics – including safer gambling
• Consistent and regular communication and engagement with
key suppliers
• On-time payments
• Fair terms
• Playtech ensures 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
• Face-to-face engagement at trade shows
• Presentations to the Board Sustainability Committee on
• 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
• Management teams use account management structures and
CRM tools across our business to ensure we are delivering to our
licensees’ and customers’ expectations
• Playtech aims to apply best practices, develop skills and
capabilities, and deliver continuous improvement in execution to
enhance the overall customer experience
sustainable procurement risk assessment and sustainable supply
chain strategy
• 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
• Ensures supplier compliance with regulatory requirements,
through due diligence checks, GDPR reviews and information
security checks
• Playtech ensures supplier compliance with human rights and
climate requirements
• Playtech actively chooses to work with partners that are leaders in
their own field and share Playtech’s standards and values
46 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Regulators and policymakers
Society and communities
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, which is vital to raise industry standards
and protect customers, whilst also ensuring the industry continues to
provide entertaining products to its customers, and better understand
regulator concerns and decision making.
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.
• Further evolution of safer gambling regulatory requirements
• Societal concerns about the impact of gambling on digital wellbeing
• Expansion in the use of technology and data analytics to
protect players
•
Increased emphasis on enhanced protection or stricter regulatory
requirements for potentially more vulnerable groups, e.g. under 25s
and mental health
• Ethical and responsible use of technology and generative AI
• Action to reduce the risks and impacts on climate change
and nature
• Concerns about the growth of unlicensed operators
• 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
and consumer protections
• Equality, diversity and inclusion
• The impacts of the Israel–Hamas war and war in Ukraine
• Partnership, engagement and support for local community
organisations and causes
• Board member participation in trade body and one-to-one
• Engagement with the Sustainability and Public Policy
meetings with regulators and policymakers
Board Committee
• Chief Compliance Officer provides the Board with regular updates
• The Board is provided with updates from the Chair of the
on developments
Sustainability Committee on:
• The Board is engaged with the licensing processes in several new
• The Company’s safer gambling strategy
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
• Climate change
• Human rights in the workplace and supply chain
• The Board is provided with regular updates on community-related
efforts led by Playtech colleagues
• Endorsement of near-term and 2040 net zero targets and roadmap
for SBTi validation
• Sustainability-linked remuneration to include Executive Committee
and selected leaders
See KPI section on pages 12 and 13
Playtech plc Annual Report and Financial Statements 2023
47
Strategic Report
Strategic Report
Responsible business and sustainability
Sustainability: Shaping our
sustainable future
Our progress in 2023
I am pleased to outline the highlights from our 2023 performance.
During the year, to ensure that we continued to uphold the
highest standards, Playtech undertook a further review of the
business against the GamCare B2B Safer Gambling Standard,
extended the scope of the audit, and was awarded the Advanced
Level Three of the standard – the highest possible level of
award. In 2023, we continued to strengthen our portfolio of safer
gambling technology and solutions under Playtech Protect, with
the development of personalised responsible gambling journeys.
Our people are critical to our business success. In 2023,
we introduced a new Global People Framework covering all
elements of our people strategy from recruitment and onboarding
to succession planning and personal and professional development,
embedding equality and inclusion at the core of our strategy. We are
proud to have launched a Global Benevolent Fund, to provide
enhanced support to colleagues and their immediate families who
may encounter unforeseen, severe life-changing challenges.
We also set in motion our net zero by 2040 plan. In early 2024,
the Science-Based Targets initiative (SBTi) approved Playtech’s
near-term science-based emissions target, a 50.4% reduction in
its scope 1, 2 and 50.4% in scope 3 emissions by 2032. Playtech
has also committed to set long-term emissions reduction targets
with SBTi in line with reaching net zero by 2040.
Another key highlight in 2023 was the launch of a new
sustainability partnership with Hubbub, to further enhance
colleague awareness and engagement on sustainable action.
We continued and expanded our partnerships with expert
charities and academics to help people live healthier lives online,
as well as supporting a wide range of charitable and volunteering
activities. By the end of 2023, we had exceeded our community
target set for 2025, with over 160,000 people engaged through
community investment and mental health programmes over the
past three years.
I am proud of the progress we have made in 2023. Our focus for
2024 will be to go further and deeper in making sustainability
integral to the way we do business at Playtech – for every
colleague, irrespective of what they do and where they work
in the organisation.
Linda Marston-Weston
Chair of the Sustainability and
Public Policy Committee
26 March 2024
In 2023, we continued
to make good progress
towards meeting our 2025
targets and commitments.
I am proud of the work
we are doing to embed
sustainability into the DNA
of our business, our values
and our culture.”
48 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Our sustainability governance
Our sustainability strategy is overseen by a Board-level Sustainability
and Public Policy Committee, which is responsible for monitoring the
Group sustainability performance as well as setting targets for the
Group. The Committee also actively engages with external subject
matter experts, leading academics and charities to help challenge
and strengthen Playtech’s overall approach.
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-level management, tracks performance and leads
engagement and partnerships with external partners. Additionally,
there are topical forums to further support delivery of the agenda
including the Environment Forum and Community Investment Committee.
The Sustainability function also works closely with the Regulatory
Affairs and Compliance function to align and integrate compliance
and regulatory considerations into planning and decision making.
The Regulatory Affairs and Compliance function is subject to
recurring annual reviews, the scope of which is dynamic and varies
from year to year. This function continued to lead the Compliance
Council and other internal governance forums.
The newly established Risk, Internal Controls and Assurance function
together with Internal Audit play a key role in ensuring that internal
controls, including sustainability-related matters, are integrated into
operational processes across the business.
Read more on the sustainability governance structure on
www.investors.playtech.com/sustainability
Action and accountability
We believe that growing our business in a sustainable and
responsible manner is a key factor in delivering long-term value for all
our stakeholders.
For this reason, in 2023 the Board strengthened sustainability
governance and accountability beyond Executive Management, by
linking the Company’s sustainability performance and year-on-year
progress to the remuneration of the Management Committee and
selected leaders. The sustainability performance and measures
relate to material elements of our sustainability strategy, which include
safer gambling, diversity and inclusion, and the environment.
The Board will continue to review and expand the Company’s
environmental, social and governance performance measures as well
as the scope to build on collective efforts to meet our commitments
and most importantly, embed sustainability into our culture and
business operations.
Embracing challenge
on sustainability
As a business in a rapidly changing industry, Playtech aims to
play its part in raising standards and embedding sustainability
internally and across the sector. With the continuously evolving
societal and stakeholder expectations, Playtech recognises
the importance of engaging with stakeholders to ensure the
Company’s approach to sustainable business remains robust
and meets expectations. As a result, in 2021, Playtech set
up a Stakeholder Advisory Panel to challenge and guide its
sustainability agenda.
Following the seven successful panel sessions from the last
couple of years, which allowed Playtech to draw on a wide
range of knowledge, insights and experiences, the Company
has continued its engagement with this group in 2023. The
panel reconvened in person in November 2023, sharing ideas,
suggestions, and constructive challenges with members of
Playtech’s senior management team and Board members. The
panel has a crucial role in shaping the sustainability strategy and
improving performance.
The main objectives of the session were to discuss global trends
and strategic questions that will be important in strengthening
and shaping the future of Playtech’s sustainability strategy,
review the Company’s progress and the challenges it faces and
demonstrate how Playtech has considered the panel’s feedback
and comments as part of the evolution of its strategy. Three main
themes emerged from the discussion:
• While Playtech has made considerable progress, there
remains work to do around embedding sustainability into the
Company’s culture and engaging with employees, providing
them with the tools to embed sustainability into their own
sphere of accountability.
• The sustainability agenda is changing at a fast pace. With
regulators continuously increasing the minimum requirements
for both disclosures and action-led compliance, Playtech will
have to innovate to keep its leading edge.
•
Industry collaboration and multi stakeholder partnerships can
be an important way that Playtech can lead on selected topics
and drive change across the sector. A sectoral collaboration
around safer gambling has been encouraged by the panel, as
well as a potential climate change coalition to accelerate the
transition to net zero.
I have been impressed by the willingness of the
Board and Executive team to actively listen and
engage in constructive conversations with the
panel, covering a broad range of sustainability
topics, with an enduring focus on the unique role
of Playtech within its sector.”
Christian Tøennesen, Group Sustainability Director,
Selfridges Group
Read more on the detailed summary of the latest panel session on the
Playtech website
Playtech plc Annual Report and Financial Statements 2023
49
Strategic Report
Responsible business and sustainability continued
Sustainability materiality
Playtech’s sustainability priorities have been based on the most material environmental,
social and governance issues that both internal and external stakeholders consider
important for industry and society. Playtech’s most recent materiality assessment was
refreshed in 2022 and takes into consideration increased political, regulatory and societal
concerns. In 2024, Playtech will refresh its materiality assessment.
Sustainability materiality matrix
The diagram below 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.
h
g
H
i
s
r
e
d
l
o
h
e
k
a
t
s
o
t
e
c
n
a
t
r
o
p
m
I
Emerging
Water
security
Circular
economy
Waste
management
Systemic risk
management
Biodiversity
Remuneration
equity
Material
Safer gambling
Employee health and safety
Climate change
Corporate
governance
Data protection
and cybersecurity
DEI
Labour
standards
Financial crime
Human rights
Responsible advertising
and marketing
Community
investment
Strategic
Tax
transparency
Board and executive
remuneration (linked to
ESG criteria)
Lobbying and
public policy
Human capital
management
Protection of
vulnerable groups
Digital wellbeing
and resilience
Charity
partnerships
Ethics of AI
Intellectual property
and disputes
Responsible
supply chain
Impact on Playtech
High
Pioneering safer gambling solutions
Promoting integrity and an inclusive culture
Powering action for positive environmental impact
Partnering on shared societal challenges
50 Playtech plc Annual Report and Financial Statements 2023
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.
The approach to materiality is dynamic and will continue to evolve and adapt, ensuring
assessments help the Company to capture changes in the business and in society, as well as
focusing on reporting and sustainability disclosures.
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
artificial intelligence (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, and the integration
of sustainability into decision making.
Climate change
Financial crime
Focuses on anti-money laundering (AML), anti-bribery and
corruption (ABC), tax evasion and professional integrity.
Human rights
Focuses on recognising the rights of all people regardless of
race, sexuality, nationality or any other status. It also covers
modern slavery.
Labour standards
Relates to basic worker rights, working conditions, adequate wages
and job security.
Systemic risk management
Refers to ensuring risks associated with business collapse
are managed, such as ensuring there is clear accountability
and reporting.
Covers policies, existing and impending regulations, initiatives,
and performance relating to climate change prevention, mitigation
and adaption.
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 marketing
Refers to adopting a socially responsible approach to advertising
and marketing, 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 became increasingly prominent
following the pandemic.
Data protection and cybersecurity
Refers 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 and governance.
Playtech plc Annual Report and Financial Statements 2023
51
Strategic Report
Responsible business and sustainability continued
Our sustainability priorities
Pioneering safer gambling solutions
What we measure:
• Playtech Protect presence and BetBuddy integrations
• Research papers, practical and theoretical
• Uptake of safer gambling tools
Why does it matter:
One of the most impactful contributions we can make to the industry
and in society is to advance safer gambling and player protection
technology. Through our safer products, data analytics and player
engagement solutions, we are keeping players safe and helping our
licensees succeed in regulated and fast-moving markets.
In action:
At Playtech, we are harnessing our culture of innovation to pioneer
safer gambling solutions for our customers. Through Playtech
Protect, we offer licensees a wide range of responsible gambling
and compliance technology, tools and solutions.
Read more on Playtech Protect on pages 56 to 59
Promoting integrity and
an inclusive culture
What we measure:
• Diversity metrics
• Employee engagement
• Employee wellbeing
Why does it matter:
We are empowering Playtech colleagues to be a force for good in the
world. Our sustainability approach helps our people work together
with clear targets to maximise our collective positive impact on players,
local communities and the environment.
In action:
We are building a culture of equality and inclusion. With our new
Global People Framework, we are embedding equality and inclusion
as a key element of our talent succession planning, and learning and
development strategy.
Read more on Playtech People on pages 60 to 69
52 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Sustainability is about taking responsibility for our Company’s impact on people,
society and the environment. At Playtech, we have developed a framework for action,
with four priority areas:
Powering action for positive
environmental impact
What we measure:
• Energy and emissions
• Renewable energy in our offices
• Water and waste consumption
Why does it matter:
Climate change is an urgent concern for everyone, including our
people, investors and local communities. This is why we have made
“Playtech Planet” a stand-alone priority in our sustainability strategy.
In action:
Playtech has committed to near-term and net zero targets to ensure
our journey to decarbonisation is in line with limiting global warming to
1.5°C, as per the Paris Agreement.
Read more on Playtech Planet on pages 70 to 81
Partnering on shared
societal challenges
What we measure:
• Monetary donations and investments
• Employees’ contributions (skills, time and/or money)
• Engagement and reach to assess impact
of community programmes
Why does it matter:
We are committed to making a positive impact on society and in local
communities. By working with expert partners, we are helping people
live healthier lives online and supporting a wide range of charitable and
volunteering activities.
In action:
We are collaborating with subject matter experts, industry stakeholders,
academic partners and charitable organisations to address societal
challenges that are most relevant to our industry and local communities.
Read more on Playtech Partners on pages 82 to 87
Playtech plc Annual Report and Financial Statements 2023
53
Strategic Report
Responsible business and sustainability continued
Our Group Sustainability Scorecard
ESG ratings:
We actively participate in a range of global ESG ratings, indices
and frameworks to benchmark our approach against best
practice and emerging sustainability challenges:
In 2023, Playtech received
a rating of “AA” in the MSCI
ESG ratings assessment.1
1
www.msci.com/notice-and-disclaimer
In 2023, Playtech was included
in the FTSE4Good Index, with
a score of 4.3 (out of 5).
In November 2023, Playtech received
an ESG rating of 12.5 and was assessed
by Morningstar Sustainalytics to be
at low risk of experiencing material
financial impacts from ESG factors.
In no event shall this information be
construed as investment advice or
expert opinion as defined by the
applicable legislation.2
2 www.sustainalytics.com/legal-disclaimers
Playtech scored 55 in the 2023 S&P Global Corporate
Sustainability Assessment reflecting an improvement
of 44 points over the last three years (CSA score as
of 24 November 2023).
Playtech participates annually
in CDP’s Climate Change
Programme. In 2023, CDP
recognised our progress with
a “B” score.
54 Playtech plc Annual Report and Financial Statements 2023
Priorities
Commitments
Performance measures
2023 performance
Pioneering
safer gambling
solutions
Expand the portfolio of safer gambling
technology, tools and solutions
Harness investment in R&D to
advance the next generation of
safer gambling solutions
Strengthen operational safer
gambling standards and
technology across our operations
Promoting
integrity and
an inclusive
culture
Promote integrity, uphold human rights
and reduce compliance risk across our
operations and supply chain
Foster equal opportunity and equality
for all employees
Support employee wellbeing
Wellbeing initiatives during the year (number of initiatives)
>250 wellbeing initiatives
Reduction in Median Gender Bonus Gap (UK)
45% decrease (from 36.5% in 2022 to 20.0% in 2023)
19% decrease (from 27.4% in 2022 to 22.1% in 2023)
16% decrease (from 26.5% in 2022 to 22.2% in 2023)
6% increase (from 41.1% in 2022 to 43.7% in 2023)
Powering
action for
positive
environmental
impact
Partnering on
shared societal
challenges
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
Help people live healthier online lives
and adopt digital resilience and safer
gambling behaviours
Contribute to and support
research, education and treatment
to prevent, reduce and address
gambling-related harm
Empower local community groups
to deliver a positive impact
Playtech Protect presence (number of jurisdictions)
Brands integrated with BetBuddy (number of brands)
Research papers during the year (number of papers)
SaaS partnerships (number of safer gambling and
compliance partnerships)
Achievement of safer gambling independent certification or
assurance across operations
Customer interactions (B2C) training during the year (completion rate)
Proportion of customers self-excluding and using safer gambling tools during the year (%) 14 % and 22% respectively
GamCare B2B Safer Gambling Standard, Level 3
G4 international certification of responsible online gambling
(Snaitech)
Reports raised through Playtech’s Speak Up whistleblowing hotline
during the year (number of incidents)
Compliance training during the year (employee completion rate)
Data protection training during the year (employee completion rate)
Human rights training during the year (employee completion rate)
Information security training during the year (employee completion rate)
Increase gender diversity amongst our leadership population to 35% by 2025
against a 2021 baseline
Reduction in Mean Gender Pay Gap (UK)
Reduction in Median Gender Pay Gap (UK)
Reduction in Mean Gender Bonus Gap (UK)
9
16
5
15
88%
11
94%
93%
93%
92%
30%
Employee participation in wellbeing initiatives during the year (number of employees)
>4,300 employees participated in at least one initiative
Employee Net Promoter Score (eNPS) from employee engagement surveys
41%
Reduce Scope 1 and 2 (location-based) carbon footprint by 40% by 2025 against
1.7% increase (excluding refrigerants, see pages 70 to 73 for
a 2018 baseline
Track Scope 3 reductions with focus on key material categories
Switch all offices, wherever possible, to renewable energy
(% of renewable energy)
more details)
106,641 tCO2e
57%
Get near-term and net zero targets approved by Science Based Targets initiative (SBTi) SBTi approval received in early 2024
Reach 415,000 people with digital wellbeing programmes by 2025
>680,000 people reached
(number of people reached directly and indirectly)
Total amount invested during the year (€)
>€ 1,500,000 (£ 1,300,000)
Engage 30,000 people in community and mental health programmes to improve
>160,000 people engaged
livelihoods by 2025 (number of people engaged)
5% year-on-year increase in employees’ contributions (skills, time or money), reaching a
10.5% global average (increase by 129.0% since 2022)
global average of 10% by 2025 (%)
Total value of monetary donations during the year (€)
>€ 710,000
Strategic Report
Playtech uses a sustainability scorecard to monitor and assess performance
against its sustainability priorities, commitments and targets.
Priorities
Commitments
Performance measures
2023 performance
Pioneering
safer gambling
solutions
Expand the portfolio of safer gambling
technology, tools and solutions
Harness investment in R&D to
advance the next generation of
safer gambling solutions
Strengthen operational safer
gambling standards and
technology across our operations
Promoting
integrity and
an inclusive
culture
Promote integrity, uphold human rights
and reduce compliance risk across our
operations and supply chain
Playtech Protect presence (number of jurisdictions)
Brands integrated with BetBuddy (number of brands)
Research papers during the year (number of papers)
SaaS partnerships (number of safer gambling and
compliance partnerships)
Achievement of safer gambling independent certification or
assurance across operations
9
16
5
15
GamCare B2B Safer Gambling Standard, Level 3
G4 international certification of responsible online gambling
(Snaitech)
Customer interactions (B2C) training during the year (completion rate)
88%
Proportion of customers self-excluding and using safer gambling tools during the year (%) 14 % and 22% respectively
Reports raised through Playtech’s Speak Up whistleblowing hotline
during the year (number of incidents)
Compliance training during the year (employee completion rate)
Data protection training during the year (employee completion rate)
Human rights training during the year (employee completion rate)
Information security training during the year (employee completion rate)
Foster equal opportunity and equality
for all employees
Increase gender diversity amongst our leadership population to 35% by 2025
against a 2021 baseline
11
94%
93%
93%
92%
30%
Reduction in Mean Gender Pay Gap (UK)
Reduction in Median Gender Pay Gap (UK)
Reduction in Mean Gender Bonus Gap (UK)
19% decrease (from 27.4% in 2022 to 22.1% in 2023)
16% decrease (from 26.5% in 2022 to 22.2% in 2023)
6% increase (from 41.1% in 2022 to 43.7% in 2023)
Reduction in Median Gender Bonus Gap (UK)
45% decrease (from 36.5% in 2022 to 20.0% in 2023)
Support employee wellbeing
Wellbeing initiatives during the year (number of initiatives)
>250 wellbeing initiatives
Powering
action for
positive
environmental
impact
Partnering on
shared societal
challenges
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
Help people live healthier online lives
and adopt digital resilience and safer
gambling behaviours
Contribute to and support
research, education and treatment
to prevent, reduce and address
gambling-related harm
Empower local community groups
to deliver a positive impact
Employee participation in wellbeing initiatives during the year (number of employees)
>4,300 employees participated in at least one initiative
Employee Net Promoter Score (eNPS) from employee engagement surveys
41%
Reduce Scope 1 and 2 (location-based) carbon footprint by 40% by 2025 against
a 2018 baseline
1.7% increase (excluding refrigerants, see pages 70 to 73 for
more details)
Track Scope 3 reductions with focus on key material categories
Switch all offices, wherever possible, to renewable energy
(% of renewable energy)
106,641 tCO2e
57%
Get near-term and net zero targets approved by Science Based Targets initiative (SBTi) SBTi approval received in early 2024
Reach 415,000 people with digital wellbeing programmes by 2025
(number of people reached directly and indirectly)
>680,000 people reached
Total amount invested during the year (€)
>€ 1,500,000 (£ 1,300,000)
Engage 30,000 people in community and mental health programmes to improve
livelihoods by 2025 (number of people engaged)
>160,000 people engaged
5% year-on-year increase in employees’ contributions (skills, time or money), reaching a
global average of 10% by 2025 (%)
10.5% global average (increase by 129.0% since 2022)
Total value of monetary donations during the year (€)
>€ 710,000
Playtech plc Annual Report and Financial Statements 2023
55
Strategic Report
Responsible business and sustainability continued
Pioneering safer
gambling solutions
One of the most significant contributions Playtech can make to the industry and
society is the provision of technology to advance safer gambling and player protection.
Through our safer gambling technology solutions, we are helping operators and the
industry strengthen player protection measures and create a safer gambling experience.
Commitments:
• Expand the portfolio of safer gambling technology, tools
and solutions
• Harness investment in R&D to advance the next generation
of safer gambling solutions
• Strengthen operational safer gambling standards and
technology across our operations
Performance measures:
• Playtech Protect presence and brands
integrated with BetBuddy
• Research papers and partnerships
• Achievement of safer gambling
independent certification or assurance
across operations
• Safer gambling training
• Uptake of safer gambling tools in our
B2C operations
16Brands
deployed and
integrated with
BetBuddy
9Number of
jurisdictions
15Compliance
and safer
gambling SaaS
partnerships
Safer gambling – the changing landscape and
our approach
Across all markets, including jurisdictions where online gambling
is in the process of being regulated, the importance of protecting
players, preventing gambling-related harm and ensuring our industry
is sustainable continues to be the most material priority for the gaming
and betting sector. With our unique reach, data capabilities, and
investments in safer gambling technologies, Playtech has taken the
conscious decision to invest in technological solutions to help our
licensees and industry, strengthen safeguards and enhance positive
player gambling experiences.
Collaboration is vital to our approach. Across its operations and
externally, Playtech has partnered 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.
Gambling regulation – evolving expectations
As regulated online gambling markets mature and as regulators gain
greater understanding of the impact of online gambling there is a
greater emphasis placed on customer protection. Newly regulating
markets learning from the experiences of other regulators are
launching with increasingly sophisticated, comprehensive player
protection obligations. A crucial aspect of this evolving trend is the
shift of regulatory focus to behavioural analytics for player protection
purposes. Engagement with policymakers and regulators plays a key
role in facilitating a fairer, safer and more sustainable gambling sector.
The Company continues to actively advocate for robust standards
in regulating and regulated markets, which can, more adequately,
safeguard players as well as better align with regulatory efforts
to improve responsible gambling measures and practices. In
jurisdictions such as the Netherlands, Spain, Ontario, New Jersey,
Colorado and more recently Colombia, there is a trend towards
requiring the use of behavioural analytics to identify and address
problematic gambling behaviours, and upcoming markets are looking
closely at this approach.
Playtech continues to contribute its experience, technology,
and research insights to support its licensees and wider
industry stakeholders.
56 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Playtech Protect – Playtech’s safer gambling offering
Our flagship solution, Playtech Protect, was established to offer
licensees a wide range of responsible gambling and compliance
technology, tools and solutions, as well as leading to the formation
of several research partnerships. These technology solutions are
embedded into Playtech’s PAM+ platform and Engagement Centre.
Using our scale, advocacy, and data-driven approach, we are offering
safer gambling tools, to help our licensees and industry deliver
responsible gambling experiences and effective player protection
measures. Playtech Protect combines our advanced technology,
data analytics and research to promote safer gambling. The offering
includes a range of tools for end-to-end player management, risk and
fraud mitigation, and customer engagement.
Within this offering, Playtech’s flagship technology product is
BetBuddy, an artificial intelligence powered solution that uses
predictive analytics and machine learning to detect problematic play
patterns. BetBuddy enables operators to segment their player base
according to risk level and initiate personalised interventions like
setting deposit limits. By predicting risk at an early stage, BetBuddy
enables operators to engage with players in a personalised way while
problematic behaviours are still developing. This provides a valuable
opportunity to guide users towards safer gambling habits before more
severe harm occurs.
In 2023, we saw further uptake of safer gambling technologies,
tools and solutions by licensees. This was driven by the introduction
of specific requirements on the use of behavioural analytics to
detect players at risk in additional jurisdictions, based on licensing
requirements, and an increased awareness across the industry of
the importance of a proactive approach to safer gambling. In 2023,
16 brands across nine jurisdictions have been integrated with and
are using BetBuddy, compared to 13 brands in 2022. Considering
that three brands have ceased operations, Playtech has onboarded
six additional brands during 2023. By the end of 2023, BetBuddy
presence had expanded into three new jurisdictions, having been
adopted by brands in Italy, Sweden and Canada, excluding Ontario.
During the year, Playtech added a supplementary new model that
operates in near real time. This new functionality allows licensees
to assess players’ risk in just a few hours after opening their
gaming account.
Additionally, Playtech took steps to improve the user experience for
BetBuddy as well as explore how best to measure the effectiveness of
interactions with at-risk players. As part of this process, we conducted
extensive interviews with customer agents and client representatives
to inform improvements to the front end of our tools. The goal is to
consolidate all relevant information on each player into a single user
interface. This would enable agents to carry out more personalised
and effective safer gambling interactions and track their impact
over time. The aim of these improvements is to test and analyse the
efficacy of specific interactions and gain quantitative insight into
which approaches are most and least successful.
The Playtech Engagement Centre offering continues to allow
licensees to create bespoke safer gambling journeys, interact with
their players and provide information or encourage them to undertake
a specific action.
Playtech continues to maintain and expand its compliance and safer
gambling Software-as-a-Service (SaaS) partnerships, which play an
important role in supporting more licensees to compete, grow and
thrive in the changing regulatory landscape. These partnerships offer
licensees a multifaceted range of quality technology solutions as well
as making access easier via the Playtech integration.
Progress on the journey to
player personalisation
Playtech’s flagship product BetBuddy, our responsible gambling
analytics platform, combines the latest research into gambling
behaviour with the power of AI, delivering a sophisticated solution
to proactively identify and engage with players who might be at
risk of experiencing harm from their gambling.
In 2023, Playtech took a significant step to further enhance
player protection with the development of new functionality
which allows operators to apply more personalised responsible
gambling rulesets for players according to the player’s risk level
calculated by BetBuddy.
Key features of this development include the ability to establish
additional optional limits or enforce specific parameters that
players must adhere to. These include cooling off periods, a
permissible number of limit increases, a personalised maximum
value the limit can be increased to and more. Different settings
can be applied according to the risk level of a player.
This avoids the need for operators to use generic, blanket rules
across the different player risk levels, and enables the application
of the appropriate and relevant level of protection. For higher
risk players, this functionality allows the operator to apply tools
in a way that offers a greater level of protection, while for lower
risk players, the tools offered meet the regulatory requirements
without being overly restrictive. This means boundaries can
be set that are more personalised and based on previous
player behaviour.
Playtech has also developed a Player responsible
gambling dashboard which will provide our licensees with a
comprehensive overview of each player’s responsible gambling
status, including a snapshot of their responsible gambling limit
usage status, as well as a historical overview of time-outs,
self-exclusions, deposits and withdrawals and other activity.
The system is currently being tested, prior to roll-out in 2024.
Playtech plc Annual Report and Financial Statements 2023
57
Playtech Protect – Playtech’s safer
gambling offering continued
One area of focus in mature markets, such as the UK, is the role
that technology solutions can play in assessing player affordability.
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 2023, Playtech increased
its compliance and safer gambling SaaS partnerships to 15, from
11 in 2022.
Safer gambling – research and insights programme
Our research and insights programme focuses on better understanding
how our products and services support safer gambling, shares our
insights and experience and encourages further research and analysis
by others.
In 2023, Playtech published Industry Research Briefings on Product
Risk, Bonus Offers, Risk Identification and Explanation, and AI
Governance and Accountability, as well as the second edition of a
research report on Responsible Gambling Trends in Latin America.
Playtech also presented two papers at the 18th International
Conference on Gambling & Risk Taking (ICGRT), the world’s largest
research conference in the field, organised by the University of
Nevada, Las Vegas International Gaming Institute. All are available on
Playtech's website, www.playtech.com.
Progress has also been made on the four-year research partnership
with Holland Casino, Erasmus University and the University of
Amsterdam that was commenced in 2022. This partnership is
exploring how to measure player risk and behavioural impacts from
safer gambling interactions. It will develop a library of interventions
which will be made publicly available. The initial pilot is due to
commence in 2024.
Safer gambling standards and certification
In 2021, Playtech was the first company to achieve 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 companies
put in place to protect customers from experiencing gambling-
related harm. For more information about the standard, please go
to www.safergamblingstandard.org.uk.
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. To ensure that Playtech continues to uphold the highest
standards, in 2023, we undertook a further review of the business
against this standard, extended the scope of the audit to all our
product verticals and were awarded the Advanced Level Three of the
standard – the highest possible level of award.
In 2023, the Snaitech Group has also secured certification of its safer
gambling programme by obtaining the renewal of the G4 international
certification of responsible online gambling.
Strategic Report
Responsible business and sustainability continued
Consumer Insights and Trends
Report in Latin America
In 2021, Playtech conducted a research study to examine how
players in Latin America perceive responsible gambling. The
study aimed to gain insight into how the gambling industry can
promote a safe and fair gambling experience in each region. In
2022, Playtech continued its research and published the second
edition of its report on responsible gambling in Latin America in
September 2023.
The report’s recommendations aim to inform future
collaboration, public policy measures and corporate approaches
to improve the development, distribution and assessment of
digital tools for those at risk of gambling-related harm. It provides
a comprehensive overview of public perceptions in the Latin
American market, including responsible gambling behaviour,
player protection messages, unconventional betting categories,
and the roles of the gambling industry and government in
promoting responsible gambling guidelines.
The study highlighted that despite the increasing trend of
online gambling, 93% of Latin Americans consider themselves
responsible gamblers and 49% prioritise not feeling anxious
while gambling as an important aspect of responsible gambling.
While there have been advancements in providing safer
gambling support and information, there are still challenges
in tailoring and measuring the effectiveness of digital tools for
player protection.
The report also showed that in the previous study, 53% of the
subject interviewees had placed bets in the last six months, a
number that jumped to almost 70% in this survey. Among those
who hadn’t placed bets in the first study, the main reasons given
were not knowing how to do it safely (24%) and being worried
about losing money or becoming addicted (14%). At the same
time, respondents said they would feel safer about gambling
online if they had more information and tools for player protection
(45%), more information about gambling companies (44%), and a
brand/company they recognise (42%).
By publishing this research, we hope that the insights will
help inform improvements in personalised, real-time player
interactions as well as approaches for creating a safe
entertainment environment for all online players across Latin
America. The Responsible Gambling Report is available at,
www.playtech.com.
As the Latin American sports betting
market grows, it is crucial for our
industry to prioritise player safety and
security. By harnessing cutting-edge
technologies, we can create a secure
environment that meets the evolving
needs of our customers. ”
Mor Weizer
Playtech CEO
58 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Responsible gambling escalations to licensees – iPoker
Strengthening safer gambling in B2C operations
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).
In 2023, a new licensee joined the iPoker network, bringing a
significant number of new players with them and so increasing the
average number of players and responsible gambling escalations, by
17% and 35% respectively in comparison to 2022. Playtech identified
an increase in promotional abuse and introduced a new “process
scanning” tool which helped in identifying prohibited software use on
a player’s computer. Additional processes for “Real Time Assistance
(RTA)” detection were also rolled out, following a new partnership
between iPoker and GTO Wizard, a leading poker web app training
provider. Playtech continued to develop improvements based on
further automation of our Bot Detection process, reducing complexity
and enabling quicker detection checks.
Escalations to licensees – iPoker
The table below summarises the percentage of unique cases
escalated to licensees on AML, collusion and responsible gambling
over the past three years.
AML (%)
2023
2022
2021
0.03
0.02
Collusion (%)
2023
2022
2021
Responsible gambling (%)
2023
2022
2021
0.39
0.53
0.05
0.76
0.71
1.30
1.03
Responsible gambling escalations to licensees – Live
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. Like 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, Latvia,
the US and Peru. In 2023, Playtech at-risk escalations from its Live
operations totalled 55,895 cases, compared to 53,085 in 2022 and
23,802 in 2021. This number has increased due to full-year operation
and expansion of the Live studio in Lima and the closure of the PGS
(Belgium) Live studio.
In 2023, Playtech B2C operations continued to build on the initiatives
started in 2022 to improve the quality and accuracy of Playtech’s
models to identify at-risk players as well our customer interaction
procedures. The projects initiated included updates to Playtech’s
technology infrastructure and use of near real-time identification of
at-risk players.
In 2023 Playtech took a significant step to further enhance player
protection with the 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.
Customer interactions
In 2023, we reported customer interactions, split by proactive
person-to-person interactions led by our Customer Service agents
at PTMS and reactive interventions triggered by player behavioural
activities and BetBuddy, our responsible gambling analytics platform.
The Playtech B2C Operations team engaged with customers on
safer gambling through several channels; over 24,000 proactive
person-to-person interactions via phone and email and over
760,000 interventions triggered via automated emails and account
inbox messages. Triggers could be the result of source of funds,
deposited amounts or directly from BetBuddy. The total number of
customer interactions has increased significantly from 2022 and
2021 due to the reintroduction of deposit limits. Players reaching the
daily gross deposit threshold receive a safer gambling intervention
email. Players, with additional deposit triggers, prompt a responsible
gambling interaction.
Playtech continued to monitor the number of self-exclusions and
use of responsible gambling tools within the UK B2C operations in
2023 as a proportion of the total unique customers. The proportion
of customers self-excluding slightly increased to 14% in 2023, from
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 decreased to 22% due to
better use of operator led limits and proactive interactions.
Uptake of safer gambling tools – B2C
Proportion of customers self-excluding (%)1
Proportion of customers using RG tools (%)2
2023
14%
22%
2022
13%
2021
10%
33%
32%
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.
Customer interactions1
2023
2022
2021
Total number of customer interactions:
525,107
12,730
Total number of proactive interactions1
24,419
12,730
Total number of reactive interactions
500,688
—
5,314
5,314
—
Total number of
automated interventions 2
763,459
263,762
529,244
1 Previously noted as 'Person-to-person interactions via phone, email or live chat'.
2 Previously noted as 'Emails'.
Playtech plc Annual Report and Financial Statements 2023
59
Strategic Report
Responsible business and sustainability continued
Promoting
integrity and an
inclusive culture
We are committed to conducting our business with integrity and promoting a culture
of openness, integrity, and accountability. We aim to ensure that this ethos guides our
decision making and creates a supportive and respectful environment where all have
equal access to opportunities and employee wellbeing is paramount.
Commitments:
• Promote integrity, uphold human rights and reduce
compliance risk across our operations and supply chain
• Foster equal opportunity and equality for all employees
• Support employee wellbeing
Targets and performance measures:
•
Increase gender diversity amongst our
leadership population to 35% by 2025
against a 2021 baseline
• Reduce gender pay and bonus gap
• Engage with supply chain following
risk assessments
•
Improve employee engagement
and wellbeing
30%Female
70%Male
Amongst leadership population
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 Company has set out its ethical business principles as it seeks to
make compliance and ethical behaviour a core part of its culture.
Taking action to reduce compliance and financial crime risk
Playtech conducts regular risk assessments 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 with third parties – including customers, business
partners and suppliers – and is supported by automated monitoring of
those entities and third parties. The system monitors for historical and
real-time considerations such as Politically Exposed Persons (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.
Playtech also conducts annual anti-money laundering risk
assessments. These assessments are based on industry standard
documents produced by the industry body, the Gambling Anti-Money
Laundering Group (GAMLG). The GAMLG methodology has been
adapted to reflect the 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 Global Regulatory Awards, hosted by Vixio Regulatory
Intelligence, provide a platform to recognise the achievements
of individuals, teams and organisations working in compliance,
corporate social responsibility, and safer gambling. In 2023, our
colleague Charmaine Hogan was the winner of the “Head of
Regulatory Affairs/Government Relations of the Year” award,
demonstrating our commitment to set new standards in the industry.
60 Playtech plc Annual Report and Financial Statements 2023
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 2023, Playtech reviewed and updated its policies to ensure they
are aligned with evolving legislation and industry best practice. This
included updates to its anti-bribery and corruption, business ethics
and Speak Up policies as well as its safer gambling policy, available at
www.playtech.com.
Playtech communicates these policies to all employees through
a number of channels including local communications, Playtech
Home (Playtech’s intranet site), annual training, bespoke training, and
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 and attest to the relevant policies under
each topic. In 2023, the Company continued training on modern
slavery and human rights for all employees. Playtech also deploys
data protection and information security awareness training modules.
For more information on data protection and cybersecurity, please
refer to the relevant sections in this chapter. 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.
Playtech continued to provide annual training to its dedicated B2C
Customer Service team, Playtech Managed Services, around
meaningful responsible gambling interactions. In 2023, the training
aimed to equip the Customer Services agents to help players manage
their habits, encourage self-reflection and ensure players’ wellbeing.
The refresher workshop focused on the distinction between
concerning and serious behaviour, game fairness and key soft skills
for effective interactions handling.
Playtech also delivers regulatory, compliance and sustainability
training to the Board every 12–18 months. During 2023, Board
training included briefings on legal requirements related to corporate
governance, with a focus on Director duties, sustainability, anti-money
laundering and anti-corruption, as well as regulatory developments
and the various nuances across jurisdictions.
Training overview
The chart below outlines the participation and completion rate in core
compliance training offered to Playtech employees.
Training type
Employees
Compliance
essentials1, 2
Human rights2
Customer
interactions (B2C)
Completion
rate
6,658
7,090
94%
4,479
4,799
215
244
93%
88%
Training type
Contractors
Compliance
essentials1, 2
Human rights2
Completion
rate
94%
93%
68
72
68
73
Total number completing the training
Total number of eligible individuals
1
Snaitech employees also completed training relating to Italian Legislative Decrees
231/01 and 231/07, in light of regulatory changes.
2 Average training hours per employee is 0.83.
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61
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, introduced in 2017, is instrumental in ensuring
that employees have access to an independent channel to raise
concerns confidentially and anonymously, wherever permitted under
local legislation.
During 2023, Playtech had 11 incident reports, anonymously
submitted via the Speak Up platform. The Speak Up review process is
led by the Chief Compliance Officer and General Counsel. Incidents
raised during 2023 were reviewed and resolved within the year. In
2024, the Company will continue to promote this as an important
channel for raising ethical concerns.
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.
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 its jurisdictions. Playtech
takes all possible steps to safeguard personal data by adhering
to the principles contained within GDPR and other relevant data
protection legislation.
Playtech has 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, monitoring
of policies and conducting reviews and data privacy impact
assessments. The Group has procedures that clearly set out 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. Playtech continues to
mature the depth and frequency of data protection and cybersecurity
reporting to maintain high visibility for its senior management team
and the Board.
In view of the evolving regulatory and technological landscape
Playtech is proactive in its approach to data privacy and aims to
continually improve its policies and their 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.
Training overview
The chart below outlines the participation and completion rate in data protection and security training offered to
employees and contractors in the organisation.
Training type
Employees
Data privacy and protection1
Information security2
4,479
4,799
6,478
7,031
Completion
rate
93%
92%
Contractors
68
73
87
92
Completion
rate
93%
95%
Total number completing the training
Total number of eligible individuals
1 Average training hours per employee is 0.83.
2 Average training hours per employee is 1.24.
62 Playtech plc Annual Report and Financial Statements 2023
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, as 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 crimes groups, which drives Playtech
Security team 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 with a focus on securing customer
data; performing security tests and audits; monitoring activities around
product applications and infrastructure; and educating licensees on the
security capabilities of Playtech’s platform.
Furthermore, the Playtech Security team provides input into the
corporate risk register as well as 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, and global regulations), network security architecture,
automation and governance, 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 24x7
Security Operations Centre (SOC) team which monitors security
incidents across the Company.
Compliance and responsible supply
chain management
In 2023, Playtech refreshed its Group procurement policy to
strengthen oversight and mitigate compliance, ethical and climate-
related risks, and to ensure minimum standards are adhered to when
entering joint ventures. The Company also formalised its Supplier
Code of Conduct, approved by the Board, to collate Playtech’s
expectations on supplier conduct and seek suppliers’ adherence
to the Code, in light of evolving regulations and the need to meet
expectations from businesses to work in a responsible ethical
manner. Following the completion of the Compliance Healthcheck
in 2022, Compliance continued to work closely with the Legal and
Procurement functions to ensure appropriate procedures are in
place, including reviewing risks arising from the supply chain and
implementing mitigating actions.
Human rights
Playtech is committed to upholding the principles embodied in the
Universal Declaration of Human Rights, as well as the International
Labour Organisation’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 2023, Playtech published its seventh Modern Slavery Act
statement, outlining the initiatives the Company is undertaking to
understand and assess potential risks of modern slavery and human
trafficking, which is available at www.playtech.com.
Key areas of focus for 2023 included reinforcement of processes and
procedures for managing third parties used in employment practices,
including audit procedures, and strengthening supplier human rights
assessments. In 2023, Playtech continued to enhance 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 140 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 71 “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. Using
a combination of sectoral risks, country risks and a spend threshold,
we have been able to identify the most relevant suppliers we wanted
to engage with to mitigate any possible risks. In 2023, this group of
suppliers represented 6.3% of our total spend.
In 2023, using the insights from the human rights risk assessment,
Playtech initiated its engagement with the suppliers having been
flagged 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
continue its engagement and 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 2023
63
Strategic Report
Responsible business and sustainability continued
Human capital development
At Playtech, our people are the key to our success and at the heart of
what we do. We aim to nurture a family-oriented, ethical and compliant
culture that is underpinned by our values as well as our commitment to
equal opportunity.
To continue to successfully grow our business, we aim to attract and
retain top talent in our sector. We seek to ensure that our colleagues
feel valued and rewarded as well as support our people to grow and
develop personally and professionally. To support and reinforce
these aims, Playtech introduced a new Global People Framework.
This framework sets out the Company’s people strategy across all
elements of the colleague journey – from recruitment and onboarding
to succession planning and personal and professional development.
Within the Global HR function, a new Centre of Excellence has
been established to oversee the Company’s strategic human
capital management functions and commitments including talent
management, learning and development, diversity, equity, inclusion
and belonging (DEIB) and wellbeing.
Workforce engagement
It is important for the Group that its employees feel fulfilled, are
satisfied with their working environment, and have been given the
right tools and guidance to develop their skills, experience and career.
With the launch of the Global People Framework, several new work
streams have been formed to improve employee engagement and
raise awareness of Playtech’s corporate strategy, support the health
and wellbeing of colleagues, and increase learning and development
opportunities. The strategy is continuously monitored and assessed
by the HR function.
In 2022, Playtech launched its first global employee engagement
survey, and utilises an employee Net Promoter Score (eNPS)
approach, to measure employee satisfaction. In the first baseline
exercise, the Company received a 70% response rate on overall
engagement, with a score at 8.2 out of 10. Playtech had an eNPS of
54% (“I would recommend Playtech as a great place to work”). The
2023 survey results had an overall engagement score of 8.1 out of
10, with an eNPS of 41%. In 2024, we are taking steps to boost and
improve our engagement plan.
During the year, the Board conducted two site visits, to our Live
studios in Michigan and Latvia, to engage with our employees. The
Board and the Executive Management team hosted engagement
sessions with different groups of employees and presented the
Group’s strategic aims.
Learning and Development
In 2023, Playtech has introduced a new leadership development
function and strategy. As part of this strategy, we are embedding
diversity and inclusion as a core part of the development programme
for current and future leaders and managers.
During the year, the Company continued its second year of its global
mentorship programme. This programme matches mentors and
mentees, based on individual professional development needs and
aspirations. The programme has been designed to complement our
performance and talent management strategy, as a long-term form of
training, learning and development. In addition to the main objective
of supporting professional development, the programme will enable
experienced colleagues to pass knowledge on to others, enriching
their role as Playtech’s leaders. The programme is designed to run for
12 months, and the programme will close in mid-2024.
The programme provided me with
not only personal and professional
development but also a better
understanding of the Company’s
structure and operations through
the Colleague feedback on the
mentorship programme.”
Employee Excellence Awards and Recognition
Playtech has an annual Excellence Awards programme to celebrate
the accomplishments, dedication and contributions of our colleagues
around the world. These awards recognise the extraordinary
achievements across eight categories, including business and
commercial, technology and innovation, individual and team
leadership and community impact.
This year a new category, the “Technical Champion award”, was
added to recognise employees who demonstrate outstanding
commitment to technology skills development and implementation
of technology to drive successful transformation initiatives across
IT modernisation, cloud transformation, data management,
security, employee productivity and customer experience. In
2023, 68 colleagues from 15 countries were recognised for their
tremendous accomplishments.
64 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
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, with an
ultimate ambition to achieve equality in the workplace. Diversity,
equity, inclusion and belonging are at the core of Playtech’s strategy
and we committed to:
1. promote an inclusive culture across the organisation;
2.
3.
4.
build a more gender diverse workforce, increasing representation
of gender at all levels 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.
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 as well as monitor progress against the stated targets.
The Board Diversity Policy, established in 2022, sets 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 Company has
refreshed its global recruitment policy, strengthening Playtech’s
commitment to recruit from a diverse, qualified group of candidates,
thus broadening our talent pool and the Company’s diversity
of thought.
In 2022, the FCA finalised new rules on Board and Executive
Committee diversity disclosures. For more information on Playtech’s
2023 diversity disclosures, see page 113.
Raising awareness on diversity
and wellbeing
As part of our global wellbeing framework, Playtech colleagues
were invited to attend webinars covering a wide variety of topics
from mental health and wellbeing to diversity and inclusion. In
2023, the Company partnered with external experts to deliver
interesting and stimulating content. These are a few examples:
Guest speaker Emily Pattinson, a Senior Inclusion and
Diversity Consultant from Inclusive Employers, hosted
a webinar on “Supporting People with Disabilities” and how to help
disabled colleagues in the workplace. This involved learning
about what types of support a colleague with a disability may
need and understanding the terminology as well as the global
legal requirements.
SIX MHS held a session entitled “Let’s Talk Addiction”. Chair
Tony Adams MBE introduced the speaker, sports journalist and
writer Ian Ridely, who spoke about his own personal journey of
addiction recovery.
On World Mental Health Day, Jenny Okolo, also of SIX MHS,
took colleagues through an interactive session to improve their
knowledge on diversity and inclusion and drive actions that
promote and protect everyone’s mental health as a universal
human right.
To mark International Men’s Day and “Movember”, Dave Walsh
shared his personal story of overcoming fears and challenges
when diagnosed with multiple sclerosis. In a webinar entitled
“Overcoming Adversity”, Dave educated colleagues on how to
better understand and support physical and mental wellbeing
amongst men.
One of the most empowering sessions
to date. Dave demonstrates the power
of positivity.”
Colleague feedback on the “Overcoming Adversity” webinar
Playtech plc Annual Report and Financial Statements 2023
65
Strategic Report
Responsible business and sustainability continued
Measuring progress on gender diversity
Playtech’s strategy aims to foster inclusion, improve gender diversity
and reduce the gender pay gap across our workforce. In 2023,
Playtech saw progress against its global target to reach 35% female
representation in leadership positions by 2025, reaching 30%,
compared to 26% in 2022. In 2024, Playtech will continue 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 looks at the
increase in the number of women on FTSE 350 boards. In February
2024, Playtech was recognised as one of the top 10 performers in the
eighth annual FTSE 350 Women Count Report. Playtech ranks ninth
place and is one of the 68 FTSE 350 companies that have already met
or exceeded the target for Women in Leadership ahead of the target
year, with 50.5% of its leadership positions (defined as Executive
Committee and direct reports) held by women.
In 2021, Playtech signed up to the All-In Diversity project, an industry-
led not-for-profit initiative to benchmark diversity, equality and
inclusion for the global betting and gaming sector. In 2023, All-In
Diversity released its fourth report on the sector’s workforce, ranking
Playtech among the top 12 companies. The latest findings continue to
showcase the gambling sector as an effective barometer of emerging
global trends, technology and changes in society and their impact on
the workplace, and we were delighted to be listed alongside many of
our industry peers.
The Women in Gaming (WIG) Diversity and Inclusion Awards are
aimed at recognising and celebrating the achievements of women in
the industry including individuals, teams and organisations that have
demonstrated exceptional commitment to promoting diversity and
inclusion. In 2023, Playtech won the “Company of the Year” award,
the “Excellence in Customer Service (Supplier)” award and the
“Inspiration of the Year (Supplier)” award, which was won by Playtech-
owned company Quickspin.
The Emerging Leaders of Gaming 40 Under 40 is a programme that
recognises professionals under the age of 40 who are making a
remarkable contribution to the casino gaming industry. In September 2023,
the “Class of 2024” was announced in which Anastasia Kokova, Playtech’s
Subsidiary Director in Kyiv, Ukraine, was among the 40 honourees.
Gender splits: The following charts illustrate the global diversity data
and trends from 2021 to 2023.
Male
Female
Prefer not to say
Employees (%)1 39.2
2023
2022
2021
60.0
60.6
62.7
Senior managers (%)2
2023
2022
2021
69.3
73.8
80.8
Leadership population (%)3
2023
2022
2021
Directors (%)4
2023
2022
2021
69.6
74.1
77.4
66.7
71.4
71.4
0.8
39.2
39.4
37.3
30.7
26.2
19.2
30.4
25.9
22.6
33.3
28.6
28.6
Junior managers (%)
2023
68.3
31.6
0.1
STEM (%)
2023
Revenue generating (%)
2023
61.0
79.3
19.9
0.8
38.5
0.5
Direct reports to the Executive Committee (%)5
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 going
into 2024 is to continue to collect and monitor our data in the UK and
beyond and ensure the right behaviours in our leaders which in turn
will promote a more inclusive culture and workforce.
2023
2022
2021
47.1
50.6
58.7
Executive Committee (%)
2023
2022
2021
63.6
63.6
70.0
52.9
49.4
41.3
36.4
36.4
30.0
1
2
3
4
5
Employees are defined as the total number of employees on the payroll on 31 December.
Out of 7,957 employees, 61 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).
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.
Directors are defined as Board Directors on 31 December.
Excludes administrative support staff.
66 Playtech plc Annual Report and Financial Statements 2023
Human capital metrics
In 2023, Playtech continued to report on its global retention and
turnover rates as well as the total number of new hires, split by
age groups.
The table below shows the global retention and turnover figures by
age groups, in 2023, we also launched the “A Players” initiative to
support our talent retention strategy by identifying top talent in the
organisation. Playtech’s continuing investment in human capital and
attractiveness of our employment proposition is evidenced by the
recruitment of 3,275 new hires during 2023.
Global employee retention rate
Under 30 years old
30-50 years old
Above 50 years old
2023
2022
2021
63%
38%
78%
84%
68%
65%
66%
88%
93%
Global employee turnover rate
37%
38%
28%
Voluntary rate
Involuntary rate
Under 30 years old
30-50 years old
Above 50 years old
35%
65%
54%
20%
13%
63%
23%
15%
Total number of new hires
3,275
3,155
2,400
Under 30 years old
30-50 years old
Above 50 years old
72%
27%
1%
Strategic Report
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 GPG, which is the
middle pay point for males and females. The Company currently
reports on the GPG in the UK. During 2023, Playtech initiated the
enhancement of system capability to expand the reporting focus in
other markets.
This year is the sixth anniversary of publishing UK GPG data for
Playtech. The data analysis and graphical representations indicate a
significant reduction of both the mean gender pay gap and the median
pay gap. The mean pay gap dropped from 27.4% in 2022 to 22.1% and
the median pay gap reduced to 22.2% in 2023 compared to 27.4% in
2022. This is due to the active work undertaken by our HR business
partners who are responsible for providing support and advise across
Playtech’s business units on pay and fair and equal considerations
across the different teams. However, our mean bonus gender gap
has increased, from 41.1% in 2022 to 43.7% in 2023 as the Company
continues to see higher representation of men in higher salaried roles.
The proportion of males and females receiving a bonus has improved
compared to last couple of years (63.3% males and 67.8% female in
2023 vs 64.9% males and 56.5% females in 2022 vs 80.7% males
and 69.0% females in 2021) following continuous 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 the gender pay gap and will
continue to promote a culture of diversity and inclusion.
Gender Pay Gap1
Median Gender Pay Gap (%)
2023
2022
2021
22.2
26.5
18.9
Mean Gender Pay Gap (%)
2023
2022
2021
22.1
27.4
27.5
Median Gender Bonus Gap (%)
2023
2022
2021
20.0
36.5
11.4
Mean Gender Bonus Gap (%)
2023
2022
2021
43.7
41.4
44.7
1
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 2021, 5 April 2022 and 5 April 2023 respectively.
Playtech plc Annual Report and Financial Statements 2023
67
Strategic Report
Responsible business and sustainability continued
Quickspin gets moving to
improve health and wellbeing
For the past six years Quickspin, a Swedish game studio owned
by Playtech and based in Stockholm, has been running a health
and wellbeing challenge for colleagues. The “Health-a-thon” is
a challenge that entails setting and meeting wellbeing targets
such as managing stress, improving focus or sleep, practising
mindfulness, healthy eating or taking part in a physical activity –
among others – and to do this while motivating and supporting
each other to achieve goals. Each year the “missions” are
changed to provide stimulating new targets. Participants took
part in teams and tracked their activity through an app. As a
further incentive, the winning team and those individuals in first
and second place were able to make a donation - funded by
Playtech – to a charitable organisation.
The challenge engaged 71% of office employees with 74 people
spread over 13 teams taking part. Collectively, participants took
approximately 5 million steps, which is equivalent to walking
11,135 kilometres – around the distance from Stockholm to
Phuket. Participants managed to complete 916 missions,
meaning on average each person completed 12 challenges,
improving both their own health and wellbeing, creating team
spirit and positively impacting the wellbeing of others.
The team donation of 15,000 SEK went to the Soborna Ukraine
charity, which provides physical and psychological support for
around 220 families that have been severely impacted by the war.
The top two scoring individuals were both awarded a donation
of 5,000 SEK – one was made to Save the Children Sweden and
the other to the World Food Programme.
68 Playtech plc Annual Report and Financial Statements 2023
Health, safety and wellbeing
The post-pandemic landscape and hybrid working practices are
redefining the most productive ways for businesses to engage with
their employees.
Playtech recognises the importance of employee wellbeing. In 2023,
Playtech continued to implement and scale its global wellbeing
framework with a focus on physical, mental, financial and social
wellbeing to cultivate a culture of support for its employees. The
framework aims to ensure employees have access to a suite of
support, advice and networking opportunities to help them be
resilient, grow and succeed at work. In 2023, Playtech rolled out
more than 250 wellbeing initiatives with a focus on physical, mental,
financial and social wellbeing. Over 4,300 employees participated in
one or more of these sessions.
Playtech has also partnered with SIX Mental Health Services (MHS)
to offer free access to private and confidential mental health and
wellbeing services for employees. Their services include a network
of counsellors and specialists to support individual needs and
advice, through one-to-one sessions with a network of therapists,
counsellors and specialists. As part of our partnership, SIX MHS has
established dedicated support for our colleagues which offers access
to trained mental health professionals in both local languages and
in English.
Line managers have played an instrumental role in supporting the
Group’s commitments to employee wellbeing, leading efforts to
initiate and support team and individual wellbeing discussions as
well as building awareness and breaking down stigmas about mental
health, including discussions on gambling-related harm.
In August 2023, Playtech announced the official launch of its Global
Benevolent Fund, an initiative to provide crucial financial support
to colleagues and their immediate families who may encounter
unforeseen, severe, life-changing challenges such as medical
emergencies, severe illness and financial hardship. Since its inception
the fund has already supported colleagues in need, covering
hardships such as losing a family member and supporting long-term
injuries and life-changing illnesses.
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 is implementing a management system
to ensure full compliance with local Italian legislation.
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
2023
2022
2021
9
8
10
1.3
310
1.1
224
1.6
266
Total days lost for accidents/working hours
x 200,0002
44.4
31.9
41.3
Number of days of absence3
10,077
10,747
6,836
1
2
3
Covers Snaitech operations only.
200,000 is a fixed coefficient (50 working weeks x 40 hours x 100).
Number of days of absence in 2021 is defined as hours lost due to illness, which includes COVID-19.
Strategic Report
Economic footprint
Playtech is headquartered 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 19 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). The total adjusted
tax charge for 2023 is €93.7 million (2022: tax credit of €54.9 million) and
the effective tax rate for the current period is 37.4% (2022: 25.5%).
Playtech plc Annual Report and Financial Statements 2023
69
Strategic Report
Responsible business and sustainability continued
Powering action
for positive
environmental impact
Climate change is a pressing concern for everyone, including our people, investors,
governments and local communities. We recognise that urgent action is needed to
substantially reduce the risks and impacts of climate change and that the Company
has an important role to play in the sector and the countries and communities where
it operates.
Commitments:
• Reduce Greenhouse Gas (GHG) emissions within our own
operations and supply chain
• Build capability and climate resilience through decisive actions
in both our own operations and supply chain
• Align to global climate efforts to transition to a low-carbon
economy, in accordance with the latest climate science, and
prioritise climate innovation
Targets and performance measures:
• Reduce Scope 1 and 2 (location-based) carbon
footprint by 40% by 2025 against a 2018 baseline
• Track emissions reductions across our value chain
• Switch all offices, wherever possible,
to renewable energy
• Secure approval of near-term and net zero targets by
the Science Based Targets initiative (SBTi)
Policy and commitments
Playtech’s Group Environmental policy outlines its commitment to
reduce its environmental footprint as well as to buying renewable
energy and engaging suppliers to reduce their supply chain
emissions. In 2023, the Company refreshed its policy to reflect
its near-term and net zero commitments and targets, as we set
in motion our decarbonisation plan, following Playtech’s formal
commitment through the Science Based Targets initiative (SBTi).
Playtech continued to focus on switching its operations to renewable
energy, where possible. The Board and members of the executive
management will be participating in refresher climate change training
in early in 2024.
In 2023, Playtech continued its cross-functional Environment Forum
chaired by the Head of Sustainability. The forum met three times during
the year and its remit includes setting, co-ordinating and overseeing
the strategy and response to the challenges posed by climate change.
The forum drives progress against the Company’s commitment to
buying 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 framework.
7,086 tCO2
Scope 1 and 2 (location-based) emissions (excluding
refrigerants, see page 72)
38.6%
Reduction since 2018 (baseline)
70 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Our path to net zero
•
In early 2024, the SBTi approved Playtech’s near-term
science-based emissions target by 2032. Playtech has
also committed to set long-term emissions reduction
targets with SBTi in line with reaching net zero by 2040.
• Set in motion our emissions reduction action plans
for engagement with our franchises and suppliers to
decarbonise, focusing on our growth driving operations.
• Establish clear energy efficiency programmes
in place across our offices and obtain renewable
energy certificates in our site locations, where
green energy is available.
• Drove forward
our transition to
renewable electricity
in key markets where
we operate.
• 56% of our total
energy consumption
coming from
renewable sources.
• Publicly committed
to setting a near-term
(emissions reduction)
and long-term (net zero)
the Science Based
Target initiative (SBTi).
• Meet our 50.4% near-
term global emissions
reduction target and
focus on the next phase
to net zero.
• Expand our emissions
reduction action plans
across our operations
by engaging with actors
within our value chain.
• Shift our technology and
infrastructure portfolio,
including the use of AI,
towards the reduction
of carbon emissions as
well as costs.
s
n
o
i
t
c
u
d
e
r
e
t
u
o
s
b
A
l
100%
50%
0%
50.4%
Emissions reduction for
Scopes 1 & 2 and Scope 3
(2022 baseline)
90%Emissions reduction
for Scopes 1 & 2
and Scope 3
(2022 baseline)
Net zero
achieved
2022
2023
2032
2040
Playtech plc Annual Report and Financial Statements 2023
71
Strategic Report
Responsible business and sustainability continued
Environment metrics
In line with the UK Streamlined Energy and Carbon Reporting
Regulation (SECR) requirements for 2023, Playtech has reported
its Scope 1, Scope 2 GHG emissions and energy consumption
figures for the UK. During 2023, Playtech worked to strengthen
the completeness of its Scope 1, 2 and 3 footprint as it prepared its
submission to the SBTi. This involved investigating known exclusions
to determine whether they continue to be immaterial to the overall
emissions footprint:
• global exclusions: GHG emissions from the use of refrigerants
(Scope 1); and
• partial exclusions:
• GHG emissions from the treatment of waste generated in
operations (Scope 3, Category 5): previous reporting only
included Snaitech operations due to data availability;
• GHG emissions from employee commuting (Scope 3,
Category 7): previous reporting only included Snaitech
operations due to data availability; and
• GHG emissions from HAPPYBET franchises (Scope 3,
Category 14): previous reporting only included Snaitech
franchises. These number around 10,000, while there are
around 100 HAPPYBET franchises.
Playtech’s materiality threshold for restating previously reported
data is 5%. Together, the exclusions set out above represented
5.0% of the Company’s total 2022 Scope 1, 2 (location-based) and 3
footprint. However, the difference in disaggregated reported metrics
is material, particularly for Scope 1 GHG emissions as the inclusion of
refrigerants increases Scope 1 emissions by 143% from the reported
metric in 2022.
In addition, Playtech has now also calculated its Well-To-Tank emissions
in Scope 3, Categories 4, 6, 7, and 9 to improve the comprehensiveness
of its Scope 3 footprint as part of its SBTi submission.
In order to aid compatibility, Playtech has restated its Scope 1,
Scope 3 total and breakdown by category GHG emissions for 2022.
Unfortunately, data for 2021 is not available.
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 (location-based) GHG emissions by 40%
by 2025, using 2018 as the baseline year. This target excluded
emissions from refrigerants, which had not yet been considered in
2018. Playtech’s Scope 1 and 2 (location-based) emissions, excluding
refrigerants, were 7,086 tonnes CO2-equivalent (CO2e) in 2023.
This is a 38.6% reduction compared to the 2018 baseline (11,543
tonnes CO2e).
In 2023, Playtech’s total Scope 1 and 2 (location-based) emissions,
including refrigerants, decreased by 0.9% compared to 2022. While
Scope 1 emissions, both from energy and refrigerants, decreased by
8.9% due to a decrease in energy consumption and refrigerant usage,
Scope 2, Location-based emissions increased by 3.4%. This increase
in emissions is explained mainly by the increasing emission intensity
of the electricity grids in the countries where the Company operates,
which averaged 5.1% (weighted by total electricity consumption per
country) in 2023. While Playtech cannot influence the electricity grid
intensity in the countries where it operates, it can influence its own
energy consumption. Total energy consumption decreased by 3.4%
compared to 2022. This was achieved by a combination of energy
saving measures, supported by environmental specialists and a
central fund for energy reduction projects. Playtech will redouble
72 Playtech plc Annual Report and Financial Statements 2023
these efforts in 2023, in pursuit of its target. Normalised per Full-Time
Equivalent (FTE) employees, total Scope 1 and 2 (location-based)
emissions including refrigerants decreased by 11.3% due to an
increase in headcount by 12.1%.
During 2023, Playtech continued to its transition to renewable
electricity in the key markets where the Company operates. This
has resulted in 57.2% of the Company’s total energy consumption
now coming from renewable sources, backed up by energy attribute
certificates, up from 56.4% in 2022.
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. As part of this annual exercise, Playtech
determines 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.
Thirteen out of the fifteen categories were identified as being relevant
to the Company and two were not relevant for Playtech. All relevant
categories have been calculated.
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”.
The consumption of water across the Playtech Group decreased
by 23.3% in 2023, of which the racetracks saw a 28.8% decrease
in water consumption. Playtech continues to manage and report
on waste produced 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 2023, Snaitech’s total non-hazardous waste
production increased by 10.9%. The volume that is reused or recycled
increased by 11.0%, while the volume sent to landfill has decreased to
0.01 tonnes compared to 5.69 tonnes in 2022.
External assurance and benchmarking
We engaged PricewaterhouseCoopers LLP (‘PwC’) to undertake
a limited assurance engagement, reporting to Playtech plc only,
using the 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 2023 GHG reporting (Scope 1 emissions, Scope
2 (location-based) emissions, Scope 2 (market-based), Scope 1 &
2 intensity per FTE employee and Scope 3, Categories 1, 2, 3, and
14). The assured data can be found in the Responsible Business
and Sustainability Addendum to the Annual Report 2023. PwC has
provided an unqualified opinion in relation to the relevant KPIs and
data and their full assurance opinion is available on the Playtech
website, www.investors.playtech.com/sustainability. 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 the Responsible Business and Sustainability Addendum
to the Annual Report 2023in the context of PwC’s full limited
assurance opinion and the reporting criteria found within the reporting
methodology section of the Responsible Business and Sustainability
Addendum to the Annual Report 2023, which are also available on the
Playtech website, www.investors.playtech.com/sustainability.
Strategic Report
Environment metrics
Global Scope 1 and 2 GHG emissions
(location-based)
Global Scope 1 and 2 GHG emissions
(market-based)
Global Scope 1 (tonnes CO2e)
Global Scope 2 (location-based) (tonnes CO2e)
Global Scope 1 (tonnes CO2e)
Global Scope 2 (market-based) (tonnes CO2e)
Playtech’s total carbon footprint
(in 2023)3
Global Scope 1
Global Scope 2 (market-based)
Global Scope 3
2,743 tCO2e
1,630 tCO2e
106,641 tCO2e
2023
2,743
5,928
8,6711, 2,
2023
2,743 1,630
4,3731, 2,
2022
3,0124
5,733
8,745
2022
3,0124
1,631
4,643
2021
1,171
6,720
7,891
2021
1,171
7,078
8,249
111,014
tCO2e
UK Scope 1 and 2 GHG emissions
(location-based)1, 2
UK Scope 1 and 2 GHG emissions
(market-based)1, 2
UK Scope 1 (tonnes CO2e)
UK Scope 2 (location-based) (tonnes CO2e)
UK Scope 1 (tonnes CO2e)
UK Scope 2 (market-based) (tonnes CO2e)
Global and UK energy consumption1, 2
Global total energy consumption (kWh)
UK total energy consumption (kWh)
From renewable sources (%)
2023
66
308
374
2023
66
73
139
26,404,609
27,243,173
26,558,665
11%
2022
844
274
341
2022
844
77
144
56%
57%
2021
69
281
350
2021
69
350
212
281
1,672,350
1,733,605
1,794,745
2021
2022
2023
Indicates data extracted from the Responsible Business and Sustainability Addendum to the Annual Report 2023 where it has been subject to independent limited assurance by
PricewaterhouseCoopers LLP (PwC). The full assurance statement over 2023 data can be found at www.investors.playtech.com/sustainability. The data for previous years, where assured, is detailed in the
respective Annual Reports.
1
2023 absolute data is an estimate based on 99.0% actual data coverage by headcount. Coverage has been above 99% for all three years.
2
3
4
Due to reporting timelines, data for November and December 2023 has been estimated using November and December 2022 actual data, except for sites where actual 2023 data was already
available. This is the same methodology that was applied for all three years.
Detailed breakdown on the Scope 3 categories, including calculation methods and scope, can be found in the Responsible Business and Sustainability Addendum to the Annual Report 2023.
Restated to include fugitive emissions from refrigerant usage.
Intensity
Scope 1 and 2 (market-based) GHG intensity
Scope 1 and 2 (location-based) GHG intensity
0.56
2023
1.11
Global water consumption
Total waste produced4
Total water consumption (m3)
Water consumption for watering racetracks (m3)
Hazardous waste (tonnes)
Total waste produced (tonnes)
Waste production by treatment4
Sent to landfill (tonnes)
Reused or recycled (tonnes)
20231
443,656
164,351
578,150
20222
230,871
688,707
20213
88,150
2023
40.704
5,864.99
2023
5,864.985
0.01
2022
34.154
5,288.04
2022
5,282.366
5.69
2021
0.019
7,055.86
2021
7,048.427
7.44
1
2
3
Estimate based on 75% actual data coverage by headcount.
4
Estimate based on 78% actual data coverage by headcount.
Estimate based on 73% actual data coverage by headcount.
Data covering Snaitech operations only. Actual data based
on 100% actual data coverage by headcount.
5
This figure is split between racetracks (manure/by-product
of animal origin – 5,300), racetracks (other – 378), and
offices (186).
6
7
This figure is split between racetracks (manure/by-product of
animal origin – 4,292) racetracks (other – 779) and offices (2012).
This figure is split between racetracks (manure/by-product of
animal origin – 6,946), racetracks (other – 358) and offices (195).
Playtech plc Annual Report and Financial Statements 2023
73
Strategic Report
Responsible business and sustainability continued
A partnership with Hubbub to empower employees
on taking positive environmental action
In 2023, Playtech teamed up with Hubbub, an award-winning
environmental charity designing creative campaigns to inspire
sustainable and practical actions. Playtech is proud to be part
of Hubbub’s growing network of over 2,300 organisations, from
international businesses to community groups. Through these
partnerships, Hubbub has already delivered over 100 campaigns
and inspired over 800,000 people to take action to protect the
environment around them.
Playtech’s one-year partnership with Hubbub includes
four campaigns, each with a different focus, but all geared towards
making colleagues better stewards of the environment at home, at
work and in their communities.
We kicked off the partnership with Playtech’s “Sustainability
Listening Project”, a study of Playtech colleagues’ behaviours and
aspirations around sustainable living. Over 400 colleagues took
part, with eight in ten stating they wanted Playtech to support them
in living more sustainably and to provide tips on energy usage both
at work and at home, and 75% stating they are proud to work for an
employer that is prioritising sustainability.
The second campaign was Playtech’s “Global Tech Check”, a
three-week Company-wide effort to tackle the fastest growing
waste stream in the world, electronic waste. Playtech colleagues
globally committed to reduce electronic waste by recycling their
non-working technical items and donating working devices to
people who need them. Over four weeks 581 items were collected
– 482 for recycling in an effort to keep harmful toxins out of landfill
and 99 working devices for rehoming.
In response to the Playtech community’s wish to know more
about saving energy, Hubbub designed an educational campaign
called “Power Down, Save Up” to help colleagues save energy and
money during the winter. We launched the campaign in November
with an interactive online workshop to provide an overview of what
Playtech is doing as a company to reduce energy usage, as well as
tips and tricks from Hubbub to dial down personal energy use and
save money. The fourth campaign will be rolled out in spring 2024.
“Colleagues are the bedrock of corporate sustainability – showing
how much change is possible when people come together – and it’s
been brilliant to see so many Playtech colleagues getting involved
in environmental action throughout 2023. From speaking up and
sharing ideas to inform the sustainability strategy, to donating tech
to fight e-waste, and dialling down energy to save carbon... we’ve
been amazed by the engagement and involvement.”
Natasha Gammell
Creative Partner at Hubbub
74 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
TCFD statement
Playtech has embraced the recommendations of the Task Force on Climate-related
Financial Disclosures (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.
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) and Companies Act Climate-related Financial Disclosure (CFD) requirements. 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.
Governance (CFD a)
Current approach
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 has set the agenda
and monitored 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 2023, the Committee held four 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 and 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.
Our climate risk governance structure
Board of Directors
Sustainability and Public Policy Committee
of the Board
Risk and Compliance Committee of the Board
Oversight, review
and challenge
Delegate
Information
sharing
Executive Leadership Team
CSO
Head of Sustainability
Environment Forum
Playtech plc Annual Report and Financial Statements 2023
75
Strategic Report
Responsible business and sustainability continued
Governance (CFD a) continued
Current approach continued
Each member of the Sustainability and Public Policy Committee
received training covering ESG and regulatory developments (page 61).
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.
In 2022, Playtech appointed a 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 and
Compliance and Sustainability and Public Policy Board Committees.
Playtech has a cross-functional Environment Forum which is chaired
by the Head of Sustainability, who reports into 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 Playtech’s climate policies and targets
as necessary;
•
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.
Playtech’s governance structure for climate-related risks and
opportunities is summarised in the graphic opposite. External ESG
consultants support the Environment Forum, Head of Sustainability,
CSO, and are periodically invited to join meetings of the Sustainability
and Public Policy Committee of the Board as well as the full Board.
Future plans
The full Board will continue to receive training on climate change as
part of wider sustainability training that will provide information on the
latest climate science and how the public policy agenda is developing
in this area. Playtech will continue to review and, if necessary, adapt
the Group’s governance process to ensure alignment with emerging
good practice.
Read more on training on page 61
Strategy (CFD b)
Current approach
Playtech has identified various climate-related risks and opportunities
following the scenario analysis exercise that was completed in
2021 and updated in 2022. Playtech quantified their impact where
possible and has expanded the number of risks and opportunities
that were quantified in 2023. Playtech reviews its business strategy
resilience and management approach for each identified risk or
opportunity annually.
During 2023, Playtech has also developed a net zero roadmap in
support of its commitment to near-term Science-Based Targets
and long-term net zero target. By implementing this roadmap, the
Company aims to reduce its exposure to climate-related transition
risks and strengthen its ability to capture opportunities.
76 Playtech plc Annual Report and Financial Statements 2023
Future plans
Playtech plans to undertake a further scenario exercise in 2024 to
take into account the latest climate science transition pathways and
internal business information. Playtech also intends to continue to
monitor external tools and the latest climate science to assess the
physical and transition risks associated with climate change and
report on how this has guided our strategy in future reports.
Read more on:
Scenario analysis and climate-related risks and opportunities on pages 78 to 81
Risk management, principal risks and uncertainties on pages 95 to 100
Net zero roadmap on page 71
Risk management (CFD c)
Current approach
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 and Compliance Committee
advises the Board on current and future risk strategies. The primary
responsibilities delegated to, and discharged by, the Risk and
Compliance Committee include:
• 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 and reputation); physical risks (acute and chronic);
and opportunities (resource efficiency, energy source, products/
services, markets and resilience).
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.
Strategic Report
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 and
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.
Read more on:
Scenario analysis and climate-related risks and opportunities on pages 78 to 81
Risk management, principal risks and uncertainties on pages 95 to 100
Metrics and targets (CFD g & h)
Current approach
In 2021, Playtech started to quantify the financial impact of climate-
related risks.
In 2022, Playtech strengthened the methodology and approach
around quantification of climate-related risks and broadened the
number of quantified risks and opportunities. This work has continued
in 2023, with further risks and opportunities being quantified. This has
provided the Company with a clearer understanding of the nature and
scale of the challenges it faces.
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
(location-based) 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 in the Global
Sustainability Scorecard.
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. The Company submitted its target for validation in 2023
and is currently going through the validation process with SBTi. In
early 2024, the SBTi approved Playtech’s near term science-based
emissions target, a 50.4% reduction in its scope 1 and 2 and scope
3 emissions by 2032. Playtech has also committed to set long-term
emissions reduction targets with SBTi in line with reaching net
zero by 2040.
Future plans
We will continue to refine our approach to quantification of climate
risk. We will also look to develop a suite of indicators beyond tracking
our own Scope 1, 2 and 3 GHG emissions 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.
Read more on:
Scenario analysis and climate-related risks and opportunities on pages 78 to 81
Scope 1, 2 and 3 emissions on pages 72 and 73
Group Sustainability Scorecard on page 54 and 55
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77
Strategic Report
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. The outputs of this work were reviewed in 2023 and are considered to still be
representative for Playtech.
Playtech’s scenarios and the external scenarios that fed into Playtech’s scenarios are summarised in the table below and 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 or lower scenario.
Playtech selected a 1.5°C scenario because that is the level of global warming that is considered “safe” by climate scientists and is the level of
warming the global community is aiming to achieve by 2100; a 2°C scenario because this is considered a more likely outcome considering the
scale of the challenge to limit global warming to 1.5°C; and a 3°C scenario as a reasonable worst case scenario, assuming no new policies are
announced to further limit global warming. The scenarios draw on the IPCC’s Representative Concentration Pathways (RCPs) and Shared
Socioeconomic Pathways (SSPs); the IEA’s World Energy Outlook scenarios; and the Principles for Responsible Investment’s (PRI’s) 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 and specific local impacts in its key markets.
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 and Compliance Committee of the Board. They are also considered as part of the Risk and
Compliance Committee’s biannual review of risks across the Group.
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 & 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: 1.5°C 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 and World Resources
Institute, Aqueduct Water Risk Atlas
Playtech routinely monitors the status of climate regulation in its key markets to ensure that its GHG reduction targets keep pace with
regulatory changes.
78 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
The risks and opportunities that were identified as part of the climate scenario analysis are summarised in the table below. The Company defines
short term as five years.
Therefore, very high impacts are impacts aligned with the Group materiality as set out in the Independent Auditor’s Report on page 158.
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 were 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 Climate scenarios and sources table and information gathered from within the business.
These quantifications were conducted across 2021 and 2022 for the most part, with the exception of the risk related to water stress, the risk
related to disruption to supply chains of IT equipment, and the risk related to employee productivity, which were quantified in 2023. Playtech
remains committed to update its scenario analysis, and quantification of the identified risks and opportunities, at least every three years in line
with the TCFD recommendations.
The outcomes of the climate scenario analysis are reflected in the risk register on pages 97 to 100. 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
continue to 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.
L Low: <€1m M Medium: €1m – €5m H High: €5m – €10m
V Very high: >€10m
N Not yet quantified
Denotes potential positive financial impact
Denotes potential negative financial impact
Key
Risk
Opportunity
Physical risks
TCFD category
Description
Time horizon
Materiality
Management approach
Applicable
scenario(s)
1.5°C
2°C
3°C
Cancellation of sports events due to high
temperatures or extreme weather events.
Likelihood:
Impact:
Loss of revenue and/or higher
operating costs.
Water stress causing disruption to horse
racetracks and third-party data centres.
Likelihood:
2°C
3°C
Impact:
Higher operating costs and temporary
disruption to operations.
Higher energy costs to cool buildings,
including third-party data centres,
Live studios and offices due to
higher temperatures.
Likelihood:
Impact:
Higher operating costs.
Reduced employee productivity and
ability to commute during heatwaves.
Likelihood:
1.5°C
2°C
3°C
1.5°C
2°C
3°C
Medium-
and long-term
Medium-
and long-term
Short-,
medium-
and long-term
L
L
L
L
L
L
L
L
L
M
M
Impact:
Disruption to operations and higher
operating costs.
Medium-
and long-term
Acute
Acute
Chronic
Acute
Move to night time events, which
would 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.
IT function 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.
Renew racetracks with more resilient
all-weather surfaces.
Invest in energy-saving measures
and on-site renewables.
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.
Playtech plc Annual Report and Financial Statements 2023
79
Strategic Report
Responsible business and sustainability continued
Physical risks continued
TCFD category
Description
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:
Applicable
scenario(s)
1.5°C
2°C
3°C
Medium
and long term
Time horizon
Materiality
Management approach
L
L
L
L
L
V
N
N
N
Key business units are already
stocking up on hardware and
components to ensure business
continuity and building price
premiums for priority delivery into
budgets. In addition, investment in the
capacity to quickly relocate stocks
where needed.
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.
Monitor and adapt employee-
related budgets as necessary.
Monitor the business and political
climate in key markets on an
ongoing basis.
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.
Acute
Chronic
Chronic
Chronic
Chronic
Impact:
Disruption to operations.
Temporary or permanent closure, or
investment in adaptation, of owned
assets and third-party data centres due
to unsuitability for climate impacts.
Likelihood:
2°C
3°C
Impact:
Higher capital investment, write-off
of assets and higher operating costs.
Long term
Higher employee-related costs due
to inflationary pressures from climate
change and health impacts.
Likelihood:
3°C
Long term
Impact:
Higher operating costs.
Global economic, political, and
societal instability, for example due to
migration, unavailability of key life goods,
culture change.
Likelihood:
2°C
3°C
Impact:
Disruption of operations and
higher taxation.
3°C
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:
Impact:
Higher capital investment, write-off of
assets and disruption to operations.
Long term
Long term
80 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Transitional risks and opportunities
Applicable
scenario(s)
1.5°C
2°C
2°C
3°C
2°C
3°C
3°C
3°C
TCFD category
Description
Policy and Legal
Market
Market*
Products
and Services
Markets
Carbon taxes could pose an additional
cost to the business and limit high-
emissions activities such as flying,
which would lead to a need to recruit
expertise locally.
Likelihood:
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:
Impact:
Loss of revenue.
As heatwaves, extreme weather events
and wildfires force consumers to stay
home for periods of the year, there may be
growth in online gambling. This presents
a risk to business units that depend on
physical gambling activities, and an
opportunity to business units that focus
on online gambling activities.
Likelihood:
Impact:
Decrease or increase in revenue,
depending on the business unit.
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
Intelligent Gaming Solutions.
Likelihood:
Impact:
Increase in revenue.
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:
Impact:
Increase in attractiveness to
prospective employees.
Time horizon
Materiality
Management approach
Set and review emissions
reduction targets.
Expand local recruitment networks
and invest in local talent pools.
Relocate employees.
Monitor the situation and maintain
capacity to supply increases
in demand.
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.
Monitor the situation and maintain
capacity to supply increases
in demand.
Monitor the situation and maintain
and expand, if necessary, operations
in more attractive locations.
V
V
V
V
N
N
L
N
Medium term
Long term
Long term
Long term
Long term
* 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.
Playtech plc Annual Report and Financial Statements 2023
81
Strategic Report
Responsible business and sustainability continued
Partnering on shared
societal challenges
Playtech is committed to making a positive impact on society and in local communities,
where it operates. By working with subject matter experts, academic partners and charity
organisations, we aim to help people live healthier lives online and support a wide range
of charitable and volunteering activities. We recognise that the challenges facing the
sector and our communities cannot be solved by one organisation alone, and that driving
positive social change requires collaboration and partnership.
Our approach
A guiding principle for Playtech’s philanthropic and volunteering
activities is collaboration through partnerships. Playtech’s social
impact efforts focus on a wide range of themes, including mental
health, digital wellbeing and safer gambling, as well as humanitarian
causes, and supporting colleagues and communities in crisis.
At Playtech, we recognise the significance of addressing the
concerns that matter most to our stakeholders and industry. One
of the most material areas of focus is how best to reduce gambling-
related harm and promote positive digital wellbeing. The delivery of
our healthy online lives and digital wellbeing programme displays our
commitment to finding solutions and making a meaningful impact
within the industry.
Our Global Community Investment Programme is designed to
support causes that are pertinent in the local markets where we
operate. Around the world, Playtech supports and encourages
employees to contribute their time, skills, money and, most
importantly, passion to make a positive social impact in their
communities. By building a strong and enduring network with local
charities and social enterprises, Playtech explores how to positively
contribute to societal challenges.
Playtech’s Global Community Investment Committee is comprised
of senior management, who oversee and monitor the strategy and
governance of the philanthropic and volunteering activities across
the Group. Local offices have established and formalised charity
committees to oversee and drive community investment activity.
Commitments:
• Help people live healthier online lives and adopt digital
resilience and safer gambling behaviours
• Contribute to and support research, education and treatment
to prevent, reduce and address gambling-related harm
• Empower local community groups to deliver a positive impact
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
• Strive for 5% year-on-year increase in employees’
contributions (skills, time or money), reaching a
global average of 10% by 2025
>680,000
People reached, directly and indirectly, with digital
wellbeing programmes
>£1,300,000
Total amount invested during the year in research,
education and treatment programmes designed to
reduce gambling-related harm
82 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Charitable giving and volunteering in our communities
In 2023, Playtech worked with more than 115 local charities in 12 markets, an increase from over 100 charities and ten markets in 2022. Through
the programmes supported, Playtech engaged with more than 47,000 people* in 2023, an increase from over 45,000 people engaged in 2022.
Community investment includes gifts in kind, monetary donations and employee volunteering. The total value of monetary donations totalled
over €730,000. Employees are encouraged to volunteer for a day each year, as well as support charitable fundraising through our matched
giving programme. Of the 12 countries that took part in the community investment programme, an average of 11% of employees contributed their
time, money or skills in their community.
*
Engaged is defined as an individual that has directly benefited and/or has interacted with the programme by receiving financial and/or in-kind support. Community programmes include all remaining
causes excluding mental health and digital wellbeing, e.g. health, hardship and environment.
>115
Number of
charities
supported
12Number of countries
18Number of ‘Tech for
involved in the Community
Investment programme
Good’ initiatives, within
the programme
>47,000
Number of people engaged through
the community investment programme
in 2023
Volunteering in Estonia:
Playtech’s community impact
“Tech for Good” initiative to
combat clothing poverty
Playtech is committed to providing opportunities for its
employees to become involved in charitable and volunteering
initiatives. Our Community Investment Programme is available
to Playtech employees and aims to support colleagues in
collectively making a difference in their local communities,
through their contributions of time, skills and/or money.
Playtech provides every employee in the organisation
with the opportunity to volunteer and support their local
communities for one day a year, and in Estonia, colleagues
are collaborating with an organisation called Let’s Donate
Time, which facilitates a range of volunteering opportunities
for employees.
For the second consecutive year, Playtech Estonia organised
charity weeks at our offices in Tartu and Tallinn. Different
time donation options over a two-week period were offered,
providing the flexibility needed for as many as possible to
take part. More than 100 employees were involved in a week
of volunteering including working with Tartu and Tallinn
foodbank, a day care centre for the elderly, a church soup
kitchen and two animal shelters. Colleagues also volunteered
at the Sooma National Park to restore alvars - a task that
involves thinning out dense juniper thickets in order to
establish paddocks so animals can graze there again.
By participating in Time Donation Weeks, Playtech Estonia
is fostering a culture that focuses on giving back and
building good relationships between employees and local
community organisations.
Playtech funds a number of community-based initiatives
aimed at harnessing technology to deliver positive social
and environmental outcomes. In the UK, Playtech supported
“Give Your Best”, an award-winning “Tech for Good” social
enterprise that is making it possible for women and children
from the refugee and asylum-seeking community in the
UK to shop clothing for free, with the dignity and choice
they deserve.
In late 2021, Playtech donated the seed funding to support
creation of a comprehensive online store. This innovative
platform empowers people and brands alike to donate
clothing effortlessly online, while also creating a space where
the community supported by “Give Your Best” can shop
online entirely free of charge.
The launch in 2022 transformed the business from being
solely reliant on an Instagram account, to a new e-commerce
platform able to process 65% more clothing every month.
“Give Your Best’ has been able to upscale its activities,
supporting more people in clothing poverty, while offering a
sustainable and ethical donation solution.
To mark International Volunteering Day on 5 December, an in-
office clothing collection and volunteering day was organised
with “Give Your Best”. Employees donated 122 items and
used their Company volunteering day to sort, steam and
upload donated clothing items on the website, where people
shopped them for free.
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Responsible business and sustainability continued
Snaitech’s partnership with Special Olympics Italia
Special Olympics Italia provides year-round sports training and athletic competitions in a variety of Olympic-type sports for children and adults
with intellectual disabilities, giving them ongoing opportunities to develop physical fitness, demonstrate courage, experience joy, and share
their skills and friendship with their families, other Special Olympic athletes and the community.
Snaitech has collaborated with Special Olympics Italia since 2017 through its iZilove Foundation, which promotes the company’s charitable
and community goals. Snaitech and Special Olympics Italia have two key sustainability objectives – to raise public awareness about the
issue of intellectual disability through promotional campaigns, and to share the same core values of integration, participation and enthusiasm.
Snaitech is using all the communication tools at its disposal and dedicating its passion and commitment to this cause. Here are a few examples
of the collaboration.
In 2017, Snaitech held a fund raising campaign for Italian athletes during the National Winter Games of Bormio, and the following year
hosted the opening ceremony of the 34th National Summer Games at the Snai Sesana Racetrack of Montecatini Terme, where over 130
colleagues acted as volunteers.
In 2020, in collaboration with Special Olympics Italia, Snaitech supported the Sappada 31st National Winter Games, and the Smart Games,
the first remote sporting event organised during the COVID-19 pandemic. In 2022, the iZilove Foundation supported the 37th National
Summer Games in Turin, involving 3,000 athletes, 1,500 volunteers and over 20 different sports disciplines. In April 2023, Snaitech employees
supported Special Olympics Italia by taking part in a relay race in the Milan Marathon to contribute to fund raising efforts to take Italian athletes
to the Special Olympics World Summer Games in Berlin. The iZilove Foundation also supported Special Olympics Italia at “Play the Games”,
the programme of sports events scheduled in several Italian regions involving around 5,879 athletes in 19 sports.
Through the iZilove Foundation, Snaitech also supported the “Adopt a Champion” fundraising campaign, to enable three Italian athletes to
participate in the games and initiated an internal campaign to invite employees to participate as volunteers in Berlin for three days to support the
athletes. Six volunteers from Snaitech in Italy and four from HAPPYBET in Germany participated, as Berlin welcomed 6,500 athletes and Unified
Partners from around 190 countries to compete in 26 sports. The athletes were supported by more than 3,000 coaches and 20,000 volunteers.
84 Playtech plc Annual Report and Financial Statements 2023
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Supporting communities in crisis
The ongoing wars in Israel and Ukraine have had an unprecedented
impact on the lives of many of our colleagues and their communities.
Our first priority was to validate the safety of our colleagues in both
countries, and ensure the Company was doing everything possible to
support them, as well as their families and local communities. Support
included aiding local response efforts and offering mental health and
trauma services, as well as, where appropriate, financial assistance
through our newly established Employee Benevolent Fund. We have
extended support to aid local response efforts with in-kind donations
and volunteering as well as donations to hospitals and charities.
We continue to closely monitor the developments in both Israel and
Ukraine, as well as the needs of our colleagues and their families and
the communities affected.
Playtech’s support in Ukraine –
the “Cold Winter Project”
Since the outbreak of the war in Ukraine, Playtech has been
committed to supporting both our own colleagues living
and working in the country, as well as the people of Ukraine
affected by the ongoing conflict. We have partnered with
humanitarian organisations to provide essential aid, as
well as support to a wide range of non-profit organisations,
enabling them to deliver vital medical equipment, supplies and
psychological assistance to those in need.
Towards the end of 2022, Playtech helped to fund an initiative
called the Cold Winter Project, aimed at supporting as many
people as possible during the winter months. The Project was
run in partnership with two charities, the charity foundation
Relief Ship and charity fund Favor and covered three
focus areas.
The first entailed providing help to nearly 1,000 people left
homeless by the war and living in unheated shelters in Dnipro
and in the community of Bezliudivka in the Kharkiv area.
Unable to keep warm or prepare hot food, they were affected
by many issues related to the electricity blackout. Depending
on the differing needs of the refugee groups, firewood and
blankets were provided, as well as generators, gas burners
and gas bottles, which, on delivery by charity volunteers, were
carefully unpacked and instructions on safe use provided.
During December 2022, Playtech colleagues donated
Christmas gifts that were then wrapped and distributed to
over 250 children situated in shelters across Ukraine.
The second initiative was funding the delivery of warm
meals to around 161,700 people living in eight cities from
December 2022 to mid-March 2023. The cities were then
under constant fire and recipients of the meals included
city residents and migrants as well as sick, elderly, disabled
and low-income people in need. Meals were delivered to
15 different lunch hotspots and involved the purchase and
preparation of over 25,000 kilogrammes of food.
The third Cold Winter Project initiative was the purchasing of
eight ambulances, installing professional medical equipment
in each and then delivering them to war zones in dire need of
medical transport and equipment.
In December 2023, Playtech demonstrated its ongoing
commitment to the Ukrainian communities by funding the
“Elderly People’s Home” project. This project aims to assist
605 elderly residents of Dnipro Geriatric House, Ukraine’s
largest facility for senior citizens. Many of these residents
are homeless due to displacement and mental health issues.
The project involves upgrading the bathrooms and replacing
all the windows in the building that accommodates 605
elderly people.
Playtech plc Annual Report and Financial Statements 2023
85
Investing in safer gambling:
research, education and treatment
Healthy online lives and digital wellbeing
The impacts of gambling-related harm, particularly on mental
health, have been rising up the sector’s agenda and coming under
increasing scrutiny. This is taking place against a backdrop of societal
change; with both availability of gambling, and people spending time
online increasing – not just to gamble or bet, but to play games and
engage with a broad range of social media. Alongside their role as
entertainment, all these activities have the potential to encourage
unhealthy behaviour and blur the boundaries of what constitutes
gambling and healthy online behaviour.
It is now more urgent than ever that academics, policymakers and
the gambling industry collaborate with treatment providers and
those with lived experience of addiction to make gambling safer.
The conversation around gambling has too often been politicised
and divided, making it difficult to share insights between all interested
parties. This is detrimental to reducing gambling-related harm, which
should be everyone’s shared goal.
As one of the largest suppliers of gambling products around the world,
Playtech is at the forefront of bringing together the gambling industry
with academics, policymakers and charity experts. There is strong
consensus on many fronts: the need to share data more effectively
on gambling, to trial theory in practice before implementing it and to
recognise gambling as a health issue.
In 2020, Playtech announced its Healthy Online Living Programme,
a commitment to support 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. The focus areas
include offering preventative education; supporting capability building
of frontline staff and support organisations; building the skills of
frontline workers in the gambling sector and in healthcare; catalysing
innovative digital solutions; and leveraging research, data and AI to
deliver insights and solutions.
Strategic Report
Responsible business and sustainability continued
Evidence-based research to
advance player protection
Playtech aims to contribute to building a more responsible,
sustainable gambling industry. A key element of Playtech’s
approach is to support evidence-based research to develop
and test best practices to advance player protection measures
as well as to address gambling-related harm. Since 2021,
Playtech has supported a number of US focused research
projects carried out by the Kindbridge Research Institute.
The Kindbridge Research Institute commissioned the Center
for Gambling Studies at Rutgers University in New Jersey, a
leading public research university in the United States, to set
up an evidence-based telehealth model which will be used to
evaluate the effectiveness of digital gambling-related harm
support and treatments. Treatment for gambling disorder
in the US faces several barriers, including the fact that most
options involve in-person delivery.
The Kindbridge Research Institute’s Treatment Disparity
Project is being conducted with Rutgers University to identify
the availability of treatment for gambling disorder in the US.
The project will result in the creation of an innovative dataset
that will pinpoint areas where there are shortages in gambling
disorder treatment and indicate the communities of greatest
need to guide Kindbridge’s telehealth service roll-out plan.
The Kindbridge Research Institute has also supported the
50x4Vets Project, an initiative aimed at improving treatment
options for US military veterans. The US is home to roughly
19 million veterans and gambling disorder is three times
more prevalent amongst this community than in the wider
population. The project’s goal is to conduct research on
patient characteristics, clinical interventions, and patient
outcomes, and identify the most effective interventions,
with the aim of implementing this approach in Veterans Health
Administration clinics both nationally and internationally.
86 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Safer gambling
Mental health
Healthy lives and
digital wellbeing
Since then, Playtech has established strategic partnerships with a
growing number of organisations. These include Betknowmore and
the Epic Restart Foundation (UK charities that help rebuild lives after
gambling problems); Kindbridge, a US organisation that provides an
online network of resources for those seeking support and advice
about gaming and gambling-related harm; RG Plus, a strategic
consultation service developed by the Responsible Gambling Council
that offers customised solutions to help operators develop innovative
responsible gambling programming; the National Centre for Suicide
Prevention; YGAM, an award-winning charity providing evidence-
based education to help prevent problem gaming and gambling; and
more. To-date, over 680,000 beneficiaries have been reached, both
directly and indirectly.
Investing in research to reduce gambling-related harm
Playtech has continued to increase its investment in research,
education and treatment programmes designed to reduce gambling-
related harm. In 2023, Playtech invested over £1,300,000 in such
programmes and initiatives.
Supporting the development
of Suicide First Aid Training
for the gambling sector
Playtech is collaborating with a wide range of non-profit partners
to tackle shared societal challenges, such as gambling-related
harm. Betknowmore UK identified a need to address inconsistent
training programmes, policies and procedures designed
for suicide prevention in the gambling sector. Betknowmore
partnered with the National Centre for Suicide Prevention,
Education and Training to develop, test and pilot training that
provides gambling operator customer service and support teams
with the knowledge, skills and confidence building needed to help
and support those at risk and/or experiencing suicidal thoughts.
This collaboration led to the creation of the Phase Red Suicide
First Aid Training course, a bespoke City and Guilds certified
programme specifically designed for responsible gambling
and customer facing teams.
Participants in compliance and customer care roles in the
gambling industry have found the training particularly helpful,
reporting that it helped remove myths and taboos surrounding
suicide and left them feeling more confident in supporting
customers who may be exhibiting signs of suicide risk. They
also found the course helpful when it came to considering
their own mental health and wellbeing.
The beneficiaries include direct participants and indirect
beneficiaries with 365 direct participants and 21,560 indirect
beneficiaries to date. With the development and piloting of the
training successfully complete, the next phase of the project is
underway to further roll out the training with the aim of it ultimately
becoming a leading programme for the sector.
In November 2023, the course received recognition, winning
the “Responsible Gambling Solution or Service Provider of
the Year” award at the Global Regulatory Awards hosted by
Vixio Regulatory Intelligence.
Playtech plc Annual Report and Financial Statements 2023
87
Strategic Report
Chief Financial Officer’s review
Strong performance
across both B2B and B2C
Overview
Group performance
Overall, Playtech delivered strong financial
results in 2023, with Adjusted EBITDA1
of €432.3 million (2022: €395.4 million),
growing 9% compared to 2022.
Total reported revenue from continuing
operations was €1,706.7 million
(2022: €1,601.8 million), representing a
7% increase compared to 2022.
The strong performance was driven by
both the B2C and B2B divisions. In B2C,
Snaitech had a solid 2023 performance
driven by growth across both the online and
retail divisions. This drove B2C Adjusted
EBITDA of €250.3 million, an increase of 6%
compared to 2022. The overall growth was
a combination of a very strong start to the
year, partly driven by pent-up demand post
the 2022 football World Cup and partly offset
by customer-friendly sporting results in the
second half of the year.
In B2B, the results were driven by strong
growth in regulated markets, with revenues
growing by 8% from €632.4 million in 2022 to
€684.1 million in 2023 and Adjusted EBITDA
increasing by 14% from €160.2 million in 2022
to €182.0 million in 2023. With strong growth
seen in the Americas and Europe ex UK,
the good performance reflects the Group’s
strategy of focusing on opportunities in
regulated and soon-to-be-regulated markets
and is further analysed in this report.
In March 2023, the Group invested
$85.0 million (€79.8 million) in Hard Rock
Digital in exchange for a small minority
interest in a combination of equity shares
and warrants. This investment forms part of
the Group’s strategy to expand its presence
in the US, in addition to providing growth
opportunities globally.
The Group has been dealing with the
ongoing Caliplay disputes, in particular
in relation to the unpaid B2B licence fees
and additional B2B services fee in respect
of FY 2023 (€32.3 million outstanding
for the period August 2023 to December
2023 and €54.2 million outstanding for
the period July 2023 to December 2023
respectively). The Group has recognised
the full outstanding amount within its total
revenue for the year and in line with its
revenue accounting policies.
In recognising the entire amount,
Playtech has assessed that it is highly
probable that there will not be a significant
reversal of this revenue in a subsequent
period and the receivable is fully
recoverable as further explained in Note 7
of the financial statements.
Reported and Adjusted Profit
Adjusted Profit before tax from continuing
operations grew by 16% to €250.5 million
(2022: €215.4 million), driven mainly by the
rise in Adjusted EBITDA and decrease in
financing costs, partly offset by the increase
in amortisation and depreciation.
Reported profit before tax from continuing
operations increased to €235.8 million
(2022: €95.6 million) which, in addition
to the above, also includes the increase
in the unrealised fair value of derivative
financial assets, which was partly offset by
higher goodwill and intangible impairments
compared to 2022. Total post-tax reported
profit from continuing operations was
€105.1 million (2022: €40.6 million), with
the movement in tax explained further in
this report.
Balance sheet, liquidity and financing
The Group continues to maintain a strong
balance sheet with Adjusted gross cash,
which excludes the cash held on behalf
of clients, progressive jackpots and
security deposits, of €363.3 million as at
31 December 2023 (2022: €272.4 million). The
increase is a result of the new €300.0 million
bond issue which took place in June 2023
and the continued strong performance
of the Group throughout the year, partly
offset by the €200.0 million repayment
of the 2018 Bond and the uncollected
€86.5 million Caliplay debt. Net debt
increased slightly to €282.8 million as at
31 December 2023 (2022: €275.2 million),
while net debt/Adjusted EBITDA remained
flat at 0.7x (2022: 0.7x).
Chris McGinnis
Chief Financial Officer
2023 saw a strong financial
performance across both
B2B and B2C, with Adjusted
EBITDA ahead of previously
raised expectations.”
9%Growth in Group
Adjusted EBITDA
88 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Playtech has taken a proactive approach to managing its balance
sheet. In June 2023, the Company acted quickly to take advantage
of a window of relative market calm and secure favourable interest
rates, issuing €300.0 million of senior secured notes due 2028 at an
interest rate of 5.875%. Part of the proceeds were used to redeem all
of the outstanding €200.0 million 3.75% senior secured notes due
in October 2023. The Company also used the proceeds to repay
the outstanding debt under its existing revolving credit facility in July
2023, which remains available and undrawn today.
Group summary (continuing operations)3
B2B
B2C
B2B licence fee – intercompany*
Total Group revenue from
continuing operations
Adjusted costs4
Adjusted EBITDA from
continuing operations
Reconciliation from EBITDA
to Adjusted EBITDA:
EBITDA
Employee stock option expenses
Professional fees
Ukraine employee support costs
Onerous contract
Fair value change of redemption liability
Impairment of investment and
receivables
Adjusted EBITDA
Adjusted EBITDA margin
2023
€’m
684.1
1,037.0
(14.4)
2022
€’m
632.4
983.1
(13.7)
1,706.7
(1,274.4)
1,601.8
(1,206.4)
432.3
395.4
406.5
6.3
14.4
—
—
—
5.1
432.3
25%
362.3
8.0
15.7
3.3
10.4
(4.3)
—
395.4
25%
* These are the B2B licence fees paid from the B2C divisions to B2B.
The Group’s total reported EBITDA increased by 12% to
€406.5 million (2022: €362.3 million). The adjusted items between
reported and Adjusted EBITDA are explained in Note 11 of the
financial statements.
Q&A with Chris McGinnis
1. What is it that sets Playtech apart?
Playtech is known for its market-leading technology, first-in-class
content and commitment to ensuring a safe betting and gaming
experience, so it could be any of these. The common thread
running through it all is our people. Everywhere you look, we have
fantastic colleagues working hard to help us lead the way and
deliver an excellent experience for our customers. They never
cease to amaze me!
2. What has surprised you the most about
the CFO role?
One of the biggest differences has been moving from an
externally focused role in investor relations to a more internally
focused one as CFO. I still engage with analysts and investors
regularly, but a much larger proportion of my time is now spent
working with our colleagues around the business. That different
perspective has shown me more clearly than ever just how much
talent we have within the business and leaves me feeling very
optimistic about the future.
3. Can you share some insights into your
experience and the challenges you’ve faced?
Unfortunately, a number of our colleagues in Ukraine and more
recently Israel continue to be affected by wars in their respective
regions. As we have done for the past few years, our priority is
to ensure that we are doing all that we can to support them and
their families.
From a financial perspective, there’s been a lot of
macroeconomic uncertainty and all businesses have had to
manage pressures from inflation and a higher interest rate
environment. Navigating that has been a challenge, but one that
we’ve risen to.
4. Can you share some of the key accomplishments
that you’re particularly proud of?
Back in March 2023, I set out several priorities and I’m pleased
with the progress we’re making across all of them. In particular,
we’ve strengthened our cash generation over the past year,
which reflects the excellent performance across both our B2B
and B2C operations.
The refinancing we completed was a key moment that highlighted
the strength of our business and our balance sheet, as well as giving
us the flexibility to pursue organic and inorganic opportunities.
5. Looking ahead, what are your priorities for the
upcoming year?
I think there are a lot of exciting growth opportunities for Playtech
in 2024 and beyond. As CFO, I see the finance team's and
my role as enabling the business to take advantage of these
opportunities, while keeping expenditure well controlled and
continuing to execute against our strategic priorities.
Playtech plc Annual Report and Financial Statements 2023
89
salary rises from higher investment in the core gaming development
team (Casino, Live and IMS). Capitalised development costs were
35.3% of total B2B R&D costs in 2023 (2022: 38.7%).
General and administrative costs include employee-related costs,
proportional office expenses, consulting and legal fees, and corporate
costs such as audit and tax fees and listing expenses. These costs
increased by 4% to €85.5 million (2022: €82.6 million), mainly due to
increases in professional fees and other administration costs.
Sales and marketing costs increased by 16% to €19.5 million
(2022: €16.8 million), mainly due to the full return of marketing
and exhibition activities to pre-COVID-19 levels.
Operations include costs relating to infrastructure and other
operational projects, IT and security and general day-to-day
operational costs, including employee and office-apportioned
costs and branded content fees. These costs increased by 4% to
€296.9 million (2022: €285.3 million), driven mainly by Playtech’s
expanding Live operations in Peru, US and Romania, as well as an
increase in costs to support Playtech’s structured agreements.
B2B Adjusted EBITDA
Total B2B Adjusted EBITDA increased by 14% to €182.0 million
(2022: €160.2 million), while EBITDA margin increased to 27% from
25% in 2022, driven by the movement in revenue and costs, as
described above.
B2C
Snaitech
Revenue*
Costs
Adjusted EBITDA
Margin
Sun Bingo and Other B2C
Revenue
Costs
Adjusted EBITDA
Margin
HAPPYBET
Revenue
Costs**
Adjusted EBITDA
Margin
B2C Adjusted EBITDA
Margin
2023
€’m
2022
€’m
Change
%
946.6
(690.5)
256.1
27%
899.8
(655.8)
244.0
27%
73.4
(67.4)
6.0
8%
18.2
(30.0)
(11.8)
N/A
250.3
24%
65.3
(63.3)
2.0
3%
20.1
(30.9)
(10.8)
N/A
235.2
24%
5%
5%
5%
12%
6%
200%
-9%
-3%
6%
*
Includes intercompany revenue from HAPPYBET of €1.2 million (2022: €2.1 million).
**
Includes intercompany costs from Snaitech of €1.2 million (2022: €2.1 million).
Strategic Report
Chief Financial Officer’s review continued
Divisional performance
B2B
B2B revenue
Americas
– USA and Canada
– Latin America
Europe excluding UK
UK
Rest of the World
Total regulated B2B
revenue
Unregulated
Total B2B revenue
2023
€’m
211.9
13.2
198.7
200.1
126.1
7.0
545.1
139.0
684.1
2022
€’m
144.7
7.6
137.1
184.6
126.7
5.6
461.6
170.8
632.4
Change
%
Constant
currency
%
46%
74%
45%
8%
0%
25%
18%
-19%
8%
35%
82%
32%
8%
1%
25%
15%
-17%
6%
Overall, B2B revenues increased by 8% (6% on a constant currency
basis), largely due to an increase in the regulated B2B business.
Regulated B2B revenues2 increased by 18%, driven by an increase
in regulated markets in the Americas and Europe (excluding the UK)
of 46% and 8% respectively (35% and 8% respectively on a constant
currency basis), partly offset by a decline in unregulated revenues.
The increase in the Americas was primarily driven by Mexico,
due to revenue growth from Caliplay (albeit it there remains a
large outstanding receivable balance – see Note 7 of the financial
statements), with increasing contributions from other countries such
as the US through Parx, Canada via NorthStar and other licensees,
and Colombia via Wplay. In Europe (excluding the UK) growth was
driven by several countries including Poland, the Czech Republic and
Spain, although this growth was partly offset by the loss of two retail
sports contracts. The increase in Poland was driven by Playtech’s
partnership with Polish state operator, Totalizator, which is going
from strength to strength, whereas in Spain, there were several new
launches during 2023.
The small decline seen across the UK market was due to the
continued impact of the uncertain regulatory climate. The majority
of the decline in unregulated markets is due to revenue moving to
the regulated category, as areas such as Ontario in Canada regulate,
as well as further declines in revenue in Asia.
B2B 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
2023
€’m
100.2
85.5
19.5
296.9
502.1
2022
€’m
87.5
82.6
16.8
285.3
472.2
684.1
(502.1)
182.0
27%
632.4
(472.2)
160.2
25%
Change
%
15%
4%
16%
4%
6%
8%
6%
14%
Research and development (R&D) costs include, among others,
employee-related costs and proportional office expenses. Expensed
R&D costs grew by 15% to €100.2 million (2022: €87.5 million), driven
by the increase in employee-related costs, including inflationary
90 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Snaitech
Snaitech revenues increased 5% from the prior year to €946.6 million
(2022: €899.8 million), with operating costs seeing the same 5%
increase to €690.5 million (2022: €655.8 million). These results were
driven by good growth across both the retail and online segments,
although there were differing dynamics across the period. The first
half saw a very strong start driven by pent-up demand post the
football World Cup. This was partly offset by customer-friendly
sporting results in the second half of the year.
As a result of Snaitech’s movement in revenue and costs, Adjusted
EBITDA increased by 5%, while the respective margin remained
stable at 27% (2022: 27%).
Sun Bingo and Other B2C
Revenue from the Sun Bingo business increased by 12% to
€73.4 million (2022: €65.3 million). Operating costs within Sun Bingo
increased by 6% to €67.4 million (2022: €63.3 million), leading to an
Adjusted EBITDA of €6.0 million (2022: €2.0 million). The increase
in Adjusted EBITDA was due to the increase in marketing spend
towards the end of 2022 during the football World Cup, resulting
in higher revenue growth in 2023 at a high contribution margin.
Furthermore, during 2023, the division saw improvements in its
return on investment from more effective marketing and stronger
retention rates. Adjusted EBITDA still includes the unwinding of the
minimum guarantee prepayment of €5.2 million in the current year
(2022: €5.4 million), recognised as an expense 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 2022 to terminate an onerous contract with a service provider.
HAPPYBET
Revenue from HAPPYBET decreased by 9% to €18.2 million
(2022: €20.1 million), with costs decreasing by 3%. The business
remains loss making, with Adjusted EBITDA loss in the current year
of €11.8 million (2022: loss of €10.8 million), albeit 2023 includes
a €2.0 million expense relating to a litigation settlement.
Below EBITDA items
Depreciation and amortisation
Reported and adjusted depreciation increased by 12% to
€46.5 million (2022: €41.5 million). After deducting amortisation of
acquired intangibles of €42.6 million (2022: €42.0 million), adjusted
amortisation increased by 24% to €84.1 million (2022: €67.8 million)
after the renewal of certain licences in Snaitech during H2 2022,
which were previously extended for free until June 2022, meaning
there was no corresponding amortisation in H1 2022. The remainder
of the balance under depreciation and amortisation of €21.2 million
(2022: €18.9 million) relates to IFRS 16 Leases and the recognition of
the right-of-use asset amortisation.
Impairment of intangible assets
The reported impairment of intangible assets of €89.8 million
(2022: €38.5 million) mainly relates to:
• the impairment of the Eyecon cash-generating unit (CGU) of
€7.8 million (2022: €13.6 million), driven by underperformance
due to the increasingly competitive UK online market;
• the impairment of the Quickspin CGU of €9.6 million
(2022: €7.0 million), as the business goes through a transitional
period, resulting in a decline in revenue, but shows signs of
recovering following an internal realignment whereby it is now
under management of the Live business unit; and
• the impairment of the Sports B2B CGU of €72.2 million (2022: €Nil)
due to the loss of two significant retail contracts in the year.
The prior year impairment of €38.7 million related to the impairments
of the Eyecon CGU of €13.6 million, Quickspin CGU of €7.0 million,
Bingo VF CGU of €12.5 million and IGS CGU of €5.6 million.
Finance income and finance costs
The reported and adjusted finance income of €12.3 million
(2022: €11.6 million) mainly relates to net foreign exchange gain of
€2.2 million (2022: €9.2 million) and interest received of €10.0 million
(2022: €2.4 million).
Reported finance costs include interest payable on bonds and
other borrowings, bank facility fees, bank charges, interest expense
on lease liabilities and expected credit losses on loan receivables.
Reported finance costs decreased by 26% to €46.2 million
(2022: €62.8 million), mainly due to the repayment of the 2018 Bond
in H2 2023. The difference between adjusted and reported finance
costs is the movement in contingent consideration of €3.3 million
(2022: €0.1 million) relating to the acquisition of AUS GMTC PTY Ltd.
Unrealised fair value changes in derivative financial assets
The unrealised fair value increase in derivative financial assets of
€153.4 million (2022: €6.0 million) is due to the movement of the fair
value of the various call options held by the Group which fall under
the definition of derivatives within IFRS 9 Financial Instruments,
with the most significant increase being as a result of the uplift in
the fair value of the Playtech M&A Call Option. Further details on
the fair value of the various call options are disclosed in Note 21C
of the financial statements.
Taxation
A reported tax expense from continuing operations of €130.7 million
(2022: €55.0 million) arises on a reported profit before tax of
€235.8 million (2022: €95.6 million) compared to an expected
charge of €55.4 million based on the UK headline rate of tax for the
period of 23.5%. The key item for which the reported tax charge has
been adjusted are UK tax losses on which a deferred tax asset of
€37.2 million was derecognised as expected utilisation would fall
outside the forecasting period and therefore there is not sufficient
certainty they will be recovered.
The total adjusted tax expense is €93.7 million (2022: €54.9 million)
which arises on an Adjusted Profit before tax of €250.5 million
(2022: €215.4 million). The total adjusted tax expense of
€93.7 million consists of an income tax expense of €35.3 million
(2022: €20.4 million) and a deferred tax expense of €58.4 million
(2022: €34.5 million). The total adjusted deferred tax expense mainly
consists of a deferred tax expense of €42.2 million relating to the
Snaitech group including the use of Snaitech tax losses and excess
interest expense.
The Group’s effective adjusted tax rate for the current period is 37.4%.
This rate is higher than the UK headline rate for the period of 23.5%.
The key reasons for the differences are a mix of profits including
subsidiaries located in territories where the tax rate is higher than
the UK statutory tax rate (which predominately relates to Snaitech
based in Italy), current year tax losses not recognised for deferred
tax purposes and expenses not deductible for tax purposes which
include impairment of intangibles.
Playtech plc Annual Report and Financial Statements 2023
91
Strategic Report
Chief Financial Officer’s review continued
Discontinued operations
Cash flow
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.
Cash conversion
Playtech continues to be cash generative and delivered operating
cash flows of €366.9 million (2022: €410.9 million) including cash from
discontinued operations which only impacts H1 2022.
Adjusted Profit
Reported profit from continuing operations
Employee stock option expenses
Professional fees
Fair value change and finance costs on
contingent consideration and redemption liability
Ukraine employee support costs
Onerous contract
Impairment of investment and receivables
Fair value changes of equity instruments
Fair value changes of derivative financial assets
Fair value loss on convertible loans
Loss on disposal of subsidiary
Amortisation of intangible assets on acquisitions
Impairment of property, plant and equipment
and intangible assets
Deferred tax on acquisitions
Derecognition of brought forward deferred
tax asset
Tax related to uncertain provision
2023
€’m
105.1
6.3
14.4
3.3
—
—
5.1
6.6
(153.4)
—
—
42.6
89.8
(8.2)
37.2
8.0
Adjusted Profit from continuing operations
156.8
2022
€’m
40.6
8.0
15.7
(4.2)
3.3
10.4
—
0.3
(6.0)
3.0
8.8
42.0
38.5
(8.3)
—
8.4
160.5
The reconciling items in the table above are further explained in
Note 11 of the financial statements. Reported profit post tax from
continuing operations was €105.1 million (2022: €40.6 million),
mainly due to the increase in the fair value of the derivative financial
assets, partly offset by an increase in CGU impairments and the
derecognition of brought forward deferred tax assets.
Adjusted EPS (in Euro cents)
Adjusted basic EPS from continuing operations
Adjusted diluted EPS from continuing operations
Basic EPS from profit attributable to the owners
of the Company
Diluted EPS from profit attributable to the 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
2023
51.7
50.2
34.7
33.7
34.7
33.7
2022
53.5
51.5
29.2
28.1
13.5
13.0
Basic EPS is calculated using the weighted average number of equity
shares in issue during 2023 of 303.3 million (2022: 300.1 million).
Diluted EPS also includes the dilutive impact of share options and
is calculated using the weighted average number of shares in issue
during 2023 of 311.9 million (2022: 311.9 million).
Adjusted EBITDA
Net cash provided by operating activities
Cash conversion
Change in jackpot balances
Change in client funds and security deposits
Professional fees
ADM security deposit (Italian regulator)
Adjusted net cash provided by
operating activities
Adjusted cash conversion
2023
€’m
432.3
366.9
85%
3.3
(2.1)
14.4
0.7
383.2
89%
2022
€’m
429.2
410.9
96%
(3.6)
15.3
24.4
11.5
458.5
107%
Excluding the impact of discontinued operations, operating cash
flows decreased from €382.7 million in the prior year to €366.9 million
in 2023, with the decline driven by the outstanding Caliplay receivable
as further explained in Note 7 of the financial statements.
Adjusted EBITDA
Net cash provided by operating activities
Cash conversion
Change in jackpot balances
Change in client funds
Professional fees
ADM security deposit (Italian regulator)
Adjusted net cash provided
by operating activities
Adjusted cash conversion
2023
€’m
432.3
366.9
85%
3.3
(2.1)
14.4
0.7
2022
€’m
395.4
382.7
97%
(3.6)
(9.4)
15.7
11.5
383.2
89%
396.9
100%
Adjusted cash conversion of 89% (2022: 100%) is shown after
adjusting for jackpot balances, 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 jackpots, security deposits
and client funds only impact the reported operating cash flow and not
Adjusted EBITDA, while professional fees are excluded from Adjusted
EBITDA but impact operating cash flow.
Cash flow statement analysis
Net cash outflows used in investing activities totalled €317.6 million
(2022: €358.3 million), key items of which include:
• €79.8 million for the acquisition of a small minority interest in Hard
Rock Digital (refer to Note 21B);
• a €41.3 million cash payment in relation to a subcontractor option
redemption (refer to Note 21C); and
• €150.0 million (2022: €125.4 million) used in the acquisition
of property, plant and equipment, intangibles and capitalised
development costs.
92 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Net cash inflows from financing activities totalled €39.9 million
(2022: outflow of €566.9 million), key movements of which include:
Financing and net debt
As at 31 December 2023, the Group had the following borrowing facilities:
• redemption of the outstanding €200.0 million bond due 2023; and
• €350.0 million 2019 Bond (2022: €350.0 million) (4.25% coupon,
• net proceeds of €297.2 million received from the new bond
issued in 2023.
Balance sheet, liquidity and financing
Cash and cash equivalents (net of ECL)
Cash held on behalf of clients, progressive
jackpots and security deposits
Adjusted gross cash and cash equivalents
Bonds
Gross debt
Net debt
Adjusted EBITDA
Net debt/Adjusted EBITDA ratio
2023
€’m
2022
€’m
516.2
426.5
(152.9)
(154.1)
363.3
646.1
646.1
282.8
432.3
0.7
272.4
547.6
547.6
275.2
395.4
0.7
Cash
The Group continues to maintain a strong balance sheet with total
cash and cash equivalents of €516.2 million at 31 December 2023
(2022: €426.5 million). Adjusted gross cash, which excludes the
cash held on behalf of clients, progressive jackpots and security
deposits, increased to €363.3 million as at 31 December 2023
(2022: €272.4 million), a result of the new €300.0 million bond issue
and the continued strong performance of the Group throughout the
year, offset by the repayment of the outstanding €200.0 million bond
due 2023 (the “2018 Bond”) and the Caliplay outstanding debt of
€86.5 million.
maturity 2026) which was raised in March 2019;
• undrawn €277.0 million revolving credit facility (2022: undrawn); this
facility is available until October 2025, with an option to extend by 12
months; and
• €300.0 million 2023 Bond issued in June 2023, as further
discussed below.
Playtech has taken a proactive approach to managing its balance
sheet. In June 2023, the Company acted quickly to take advantage
of a window of relative market calm and secure favourable interest
rates. Playtech issued €300.0 million of senior secured notes due
2028 at an interest rate of 5.875% (2023 Bond). The 2023 Bond has
been assigned a rating of BB by S&P Global Ratings UK Limited and
Ba2 by Moody’s Investors Service Ltd upon issue. In July 2023, part of
the proceeds of the bond were used to redeem all of the outstanding
2018 Bond of €200.0 million 3.75% due in H2 2023 and to repay the
outstanding debt under its existing revolving credit facility, which
remains available and undrawn today. The remaining amount, after
payment of transaction-related expenses, will be used for general
corporate purposes.
Net debt, after deducting Adjusted gross cash, increased slightly to
€282.8 million (2022: €275.2 million), while net debt/Adjusted EBITDA
remained stable at 0.7x (2022: 0.7x).
Playtech plc Annual Report and Financial Statements 2023
93
Strategic Report
Chief Financial Officer’s review continued
Balance sheet, liquidity and financing continued
Contingent consideration
Contingent consideration increased to €6.2 million (2022: €2.9 million), mostly due to the fair value movement in the contingent consideration
related to the AUS GMTC PTY Ltd acquisition. The existing liability as at 31 December 2023 comprised the following:
Acquisition
Aus GMTC PTY Ltd
Other
Maximum payable earnout
(per terms of acquisition)
€45.3 million
€0.8 million
Contingent consideration as at 31 December 2023
Payment date (based on
maximum payable earnout)
€5.4 million
€0.8 million
Q4 2025
Various
Going concern and viability assessment
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 2023, the Group held total cash of €516.2 million
(2022: €426.5 million) and Adjusted gross cash, which excludes the
cash held on behalf of clients, progressive jackpots and security
deposits, of €363.3 million (2022: €272.4 million). Net debt, which is
gross debt after deducting Adjusted gross cash, increased slightly to
€282.8 million (2022: €275.2 million).
The financing and net debt position has been reported and analysed
in the relevant section above. As at the date of this report (26 March 2024)
the Group’s facilities include the 2019 Bond of €350.0 million and the
2023 Bond of €300.0 million, both of which are long-term borrowings
due in 2026 and 2028 respectively, as well as the fully undrawn RCF
of €277.0 million.
As per the going concern assessment under Note 2, under its
base case scenario management, 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.
While the base case cash flow forecasts have assumed full recovery
of the Caliplay outstanding amounts within the going concern period
of assessment, there is a remote risk that no cash will be received
depending on the progress of the legal dispute, and hence this was
modelled in the stress test scenario. Even under this scenario the
Group still has sufficient headroom on its covenants and liquidity and
hence the Directors still have a reasonable expectation that the Group
will continue as a going concern over the relevant going concern
period. This remote scenario was also modelled in the viability
assessment which covers a period of three years and concludes
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
three-year period to 31 December 2026.
1
2
3
4
Adjusted numbers throughout relate to certain non-cash and one-off items. The Board of
Directors believes that the adjusted results represent more closely the consistent trading
performance of the business. A full reconciliation between the actual and adjusted results is
provided in Note 11 of the financial statements.
Core B2B refers to the Company’s B2B business excluding unregulated Asia.
Totals in tables throughout this statement may not exactly equal the components of the total
due to rounding.
Comparative information throughout has been restated due to a change in accounting policy.
Further details are provided in Note 4C of the financial statements.
Chris McGinnis
Chief Financial Officer
26 March 2024
94 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Risk management, principal risks and uncertainties
Risk as a key priority
2023 saw us strengthen our risk
management approach through
the on-going development of a
bottom-up process whereby risk
is reviewed across our business, to
identify the main threats to delivery
of our strategy.”
A message from the Chair of the
Risk & Compliance Committee
Understanding the risks that impact our strategy
Risk management is fundamental to both robust corporate governance
and the successful delivery of our mission and objectives. The trends
outlined in our strategy present both opportunities and threats to our
business. Identifying and managing these risks is critical to delivering
our strategic goals. Regular discussion of our key priorities and the
changing landscape of challenges is the lens through which we
assess these.
Strengthening our risk management and internal control
Whilst 2020 through to 2022 presented well-known global challenges,
2023 exacerbated this, not least due to the tragic events in Israel on
7 October compounding upon that in Ukraine.
2023 saw us strengthen our risk management approach through
the on-going development of a bottom-up process whereby risk is
reviewed across our business to identify the main threats to delivery
of our strategy. A robust risk management process continues to be a
high priority for our business.
In recognition of the critical relationship between risk management
and internal control, reinforced by the UK Corporate Governance
Code guidance, we also appointed an experienced Director of Risk,
Internal Control and Assurance, to lead a new, dedicated team to
design and deliver a new Enterprise Risk Management Framework.
In 2024, we shall further enhance our approach to risk management
and internal controls, in line with Corporate Governance guidance,
through the embedment of an inter-related assurance process with
focused metrics and robust key control management for each of our
principal risks to support our operations and as a management tool
for business decisions. We shall also implement a testing schedule
for key controls emanating from our significant and principal risks.
This will form a crucial objective throughout 2024 as the new
Enterprise Risk Management programme matures.
Samy Reeb
Chair of the Risk & Compliance Committee
26 March 2024
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95
Strategic Report
Risk management, principal risks and uncertainties continued
Risk management in Playtech
Our Board is responsible for risk
management and promotes a transparent
and accountable culture through good
stewardship that does not inhibit sensible
risk taking critical to growth.
The Board supports good risk management across the Group
by implementing and overseeing a framework of appropriate and
effective controls that enable risk to be assessed and managed.
While sound risk management cannot eliminate all risks, the role of
our Board, its committees and the Executive Leadership Team is to
ensure that our risk management processes are robust, effective and
take account of appropriate exposures.
We continue to strengthen our approach to risk and controls
management to develop a process that complies with the
requirements of the UK Corporate Governance Code.
1. Identify
Strategic-focused risk assessment continues
to be a core component of the identify step.
Linking risks back to operational, business and
Group objectives allows risks to be validated and
enables better insight into understanding the
uncertainties faced. A detailed analysis of both
the causes (drivers) of the risk and the potential
consequences (outcomes) aids in understanding
the conditions surrounding the risk, which can be
mapped to the existing control environment to
identify any gaps or weaknesses. Documenting
the current control environment and its
effectiveness forms part of the identify step.
2. Assess
Risks and opportunities are assessed on
the likelihood and impact of a risk event
occurring, allowing risks and opportunities to be
prioritised. This assessment is with reference
to the effectiveness of the current control
environment – controls that are in place at the
time of assessment. This provides a real-time
picture of the current risk exposure driving the
required response.
A robust and dynamic risk management
framework ensures that risks are mitigated
and that the Group adheres to both regulatory
requirements and industry good practice when
identifying, assessing and managing risk.
3. Respond
A response is determined for each risk
and opportunity dependent on its current
assessment: accept or manage further. Actions
are developed for those risks requiring further
management, and are assigned clear ownership
and implementation timeframes in relation to the
current risk assessment.
4. Monitor
Regularly reviewing risks ensures the
information captured remains relevant, accurate
and up to date, and the status of outstanding
actions is tracked. The risk environment may
change from time to time, with the emergence
of additional causes or impacts requiring further
management of a previously ‘accepted’ risk.
Monitoring core themes across the business
as they link to the Group profile is essential for
effective risk management. Further detail on the
process and accountability for risk management
is contained on page 95 to 100.
96 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
Outlining our principal risks
Principal risks heatmap 2023
1
5
3
6
2
4
7
Critical
High
t
c
a
p
m
I
Medium
Low
1) Failure to maintain a
competitive position
Risk category
Likelihood
Impact
Trend
Link to strategy
Principal risk
Strategic
High
High
Stable
1 2 3 4 5 6
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 in the
market to keep us innovative and relevant and help us advance
as an industry.
Low
Medium
High
Critical
Mitigation
Likelihood
Key: Matrix – Risk rating
classifications (Likelihood x Impact)
Low risk
Medium risk
High risk
Critical risk
Risk
1. Remaining competitive
2. Security
3. Geopolitical considerations
4. Legal, compliance and tax
5. Sustainable business
6. Talent retention
7. Recessionary risk
Trend
Stable
Stable
Rising
Stable
Stable
Rising
Stable
With technology rapidly advancing, industry consolidations
and new and emerging markets on the table, this gives us
further opportunity to build on our strategies of:
• placing innovation at the core of the Company, 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;
• dedicating time to retaining and acquiring core talent; and
• harnessing the power of AI technology in our business
operations to drive innovation and new ways of working
and optimise our products and services to keep us ahead
of the competition.
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.
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97
Strategic Report
Risk management, principal risks and uncertainties continued
Outlining our principal risks continued
2) Data breach, technical
systematic failure or
security incident
3) Geopolitical challenges
Risk category
Likelihood
Impact
Trend
Link to strategy
Principal risk
Operational
Medium
High
Stable
Risk category
Likelihood
Impact
Trend
1 2 3 4 5 6
Link to strategy
Macroeconomic
Medium
High
Rising
N/A
Principal risk
We are entering 2024 with the war in Ukraine still active but the
situation at present is stable, and the Israel-Hamas war which
brings instability around the region, including Houthi attacks
in the Red Sea that disrupt global supply chains. In addition to
the safety of our staff, there is the risk that regional conflicts
will constrain energy supply and disrupt major transportation
routes, raising prices across the board and affecting business
operations. Over the next year, the attention and resources
of global powers are likely to be focused on three hotspots in
particular: the war in Ukraine, the Israel-Hamas conflict and
tensions over Taiwan. Escalation in any one of these hotspots
would radically disrupt global supply chains, financial markets,
security dynamics and political stability, viscerally threatening
the sense of security and safety of individuals worldwide. All
three areas stand at a geopolitical crossroads, potentially
leading to broader regional destabilisation.
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 to us by
the war in Ukraine and the Israel-Hamas war 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 Israel; 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 and Israel. We have contingency
plans on standby in case we have to react with immediate
notice and are actively monitoring the situation.
Our operational activities depend on our technology and
operational processes to ensure the availability, integrity
and confidentiality of our services, 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 customers, regulatory penalties and
reputational damage.
Mitigation
Our current focus to assure the protection of our data and
systems, mitigating the risks of compromised Playtech
systems, is led by the following security strategies as aligned
with our business objectives:
• protecting service operations and delivery, on premise
and on cloud, through advanced technological security
capabilities and skilled staff;
• establishing a robust security governance framework
which operates under global and regulatory security
standards, such as ISO/IEC 27001 and GLI-19/33
Information Security Management standard, and oversees
Playtech offices and data centres, including Snaitech;
• working with Playtech customers to provide guidance on
security configuration and procedures combined with
overall assurance that both players and customers receive
modern security capabilities by default; and
• assuring business continuity by testing contingency plans
as a response to potential technical failures or incidents
such as DDoS attacks.
Strategic considerations
The strategic priorities are security risks that may cause
service disruption or regulatory non-compliance. While those
risks may result in reputational and operational damage,
Playtech is well placed to respond and avoid any impact to its
growth potential.
98 Playtech plc Annual Report and Financial Statements 2023
Strategic Report
4) Non-compliance with a
changing landscape in legal,
regulatory, licensing and
tax requirements
5) Inability to maintain a
sustainable business
Risk category
Likelihood
Impact
Trend
Link to strategy
Principal risk
Strategic
Medium
High
Stable
Risk category
Likelihood
Impact
Trend
Strategic
Medium
High
Stable
1 2 3 4 5 6
Link to strategy
1 2 3 4 5 6
The regulatory and legislative landscape continues to evolve,
with more uncertain politics and greater pressure globally on the
industry and tax regimes; therefore, it is vital that we keep abreast
of these changes in a timely manner, ensuring Playtech is either first
to market for its licensees or retains its dominant position in already
regulated markets. We need to be flexible and dynamic when we
enter new jurisdictions, and work closely alongside the regulatory
bodies, as it can be extremely challenging both operationally
and commercially to be ahead of all the legislative requirements.
We are also seeing greater focus across environmental, social
and governance regulatory and disclosure requirements, with
application for both direct operations and supply chain.
Mitigation
It is vital we are at the forefront of regulation and in order to do
so we are committed to:
• promoting a safer gambling environment at the forefront
of our operations;
• operating a Playtech Regulatory Intelligence team who
monitors all regions, and ensures our processes and controls
are up to date and relevant;
• having dedicated internal legal, regulatory and tax teams
with responsibility for working with and advising the Board of
upcoming regulatory changes to ensure compliance;
• utilising external advice and engaging with partners who are
familiar with the landscape where possible, to reduce any
unknown exposure;
• communicating to the Board fully on all regulatory matters
which provides visibility and consultation from the top;
Principal risk
Insufficient awareness and visibility on sustainability-related
considerations such as long-term viability of the operations,
safer gambling and social impacts, and the concentration
of our customer base (see Note 7 for more detail about the
Caliplay situation).
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:
•
•
leveraging technology to promote a safer gambling
experience, reinforce player protection measures and
strengthen operational and industry standards;
increased focus on the diversification of our business
activities and customer base, including growing new
revenue streams through the SaaS business and
expanding our customer relationships in the LatAm region;
• setting commitments and targets to align and embed
sustainability into our strategy, including setting science-
based targets to tackle climate change for SBTi validation
and a gender diversity target for our leadership;
• complying with evolving and relevant ESG regulatory
requirements, including but not limited to TCFD; and
• establishment of a Sustainability and Public Policy Board
Committee, which oversees and monitors the delivery
and evolution of ESG risks and opportunities, alongside
topic specific governance forums, in which Snaitech also
actively participates with the perspective to align with the
regulations and continuous improvement.
• ongoing assessment and review of our climate-related risks
Strategic considerations
and opportunities; and
• strong engagement 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,
tax regimes, financial regulation and 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.
The above elements and our mitigation responses enforce
our commitment to ensure the long-term sustainable success
of our business and comply with evolving requirements as
well as meet evolving stakeholder expectations.
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99
Strategic Report
Risk management, principal risks and uncertainties continued
Outlining our principal risks continued
6) Failure to attract and retain
7) Adverse impact of recession
key talent
and financial markets
Risk category
Likelihood
Impact
Trend
Link to strategy
Principal risk
Operational
Medium
High
Rising
1 2 3 4 5 6
Risk category
Likelihood
Impact
Trend
Link to strategy
Principal risk
Macroeconomic
Medium
Medium
Stable
1 2 3 4 5 6
Failure to retain and attract the correct people, the pressures
of global inflation affecting the cost of living, and not
adequately planning for unanticipated departures 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 dedicate
ourselves to:
• embedding a strong Centre of Excellence (CoE) team
which directs focus to key talent pools to attract and retain
the right talent for Playtech;
• building customised strategies to identify internal talent
allowing us to secure the future of Playtech;
• creating a strong learning and development strategy to
retain and grow existing employees;
• promoting a diverse and inclusive culture through our
Company values to promote sustainability; and
• establishing effective business and workforce planning to
ensure effective succession.
Strategic considerations
Our business thrives on the innovation of our colleagues,
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.
Several factors pose a risk in the current macroeconomic
environment including rising inflation and interest rates,
recession and foreign exchange fluctuations. End customers
face financial pressure, leaving less disposable income with
which to gamble. Aside from the impact on players, elevated
interest rates also increase the financial burden on our
colleagues and licensees, and influence our investment
decisions. From a cost perspective, our B2B business is
directly impacted by rising wage pressure and the economic
climate. However, our B2C business, Snaitech, is less affected
due to a different retail structure which is mainly franchising.
Fluctuations in foreign exchange rates also pose a risk as we
expand into jurisdictions with volatile exchange rates, such
as 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 implement that mitigate the risks to an acceptable level;
• creating internal remuneration and training schemes to
retain and support existing employees; and
• creating a Global Benevolent Fund to provide financial
assistance to colleagues for unforeseen challenges.
Strategic considerations
Protecting the long-term future of the Group and delivering
on our vision is our priority as the uncertain economic climate
can adversely impact this.
100 Playtech plc Annual Report and Financial Statements 2023
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 risks.
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 2024 on existing business;
• constant growth in new markets in LATAM and the US;
The Group’s principal markets and strategy are described in detail in
the Strategic Report (pages 1 to 102).
• no major changes in working capital;
• Snaitech gaming and betting license extensions;
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 in
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 Latin America
and expanding with existing customers with more products
and markets;
• Playtech, through its B2B division, has a diverse portfolio
of licensees across retail and online, in over 40 regulated
jurisdictions; and
• Playtech, through its B2C division, is also a leader in the second
largest European 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 the fastest growing
player in Italy in the online sector when measured by GGR.
The Directors believe that a three-year period is appropriate for
their viability assessment as it is supported by a three-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 timeframe is reduced from five to three years as it is the period
over which the Directors believe they can reasonably forecast the
Group’s performance. The previous five-year period was adopted in
part at the request of the potential acquirers of the Group during the
takeover talks in 2021 and 2022 for purposes of valuing Playtech.
This three-year plan relies on certain key milestones being met in the
initial years (including continued execution of the Group’s US strategy
and further expansion in 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 on 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 95 to 100,
are considered.
Base case three-year projections
As set out in the Chief Financial Officer’s Review (pages 88 to 94), the
Group had excellent overall results which were driven by Snaitech’s
solid performance in both its online and retail divisions and continued
strong growth in B2B regulated markets. The newly acquired Hard
Rock Digital investment made in March 2023 also forms part of the
Group’s strategy to further expand its presence in the US, along with
providing growth opportunities globally.
• Caliplay dispute settled and outstanding balances received;
• repayment of the 2019 Bond; and
• no changes to Group structure.
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 three-year assessment
period, the revolving credit facility (RCF) expires (in October 2025
or October 2026 if the extension is taken) and the 2019 Bond of
€350 million is due for repayment in March 2026. The 2023 Bond
of €300 million which was issued in 2023 falls outside the viability
statement period as it is due in 2028. Within the base case projections,
it was assumed that the RCF, which is undrawn as at 31 December 2023,
will not be utilised and the Group will be in a position to repay its 2019
Bond in full. Under its base case projections, the Group is able to
meet its financial covenants under its RCF until the point it expires.
Finally, the Directors are confident that, if required, refinancing can
be achieved at acceptable terms, a point which is further discussed
under Scenario 1 below.
Climate change impact
Included within our TCFD statement on pages 75 to 81 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). Where
possible, we quantified the impact as material or immaterial. The
outputs of this work were reviewed in 2023 and are considered to still
be representative for Playtech. In the instances where it was assessed
as material, the impact was for the long term, which is defined as more
than three years, and is therefore currently not considered to impact
the conclusions made in our viability statement period.
External advisers were 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. Playtech has expanded the number of
risks and opportunities that were quantified in 2023 and plans to
undertake a further scenario exercise in 2024. The Group has also
developed a net zero roadmap in support of its commitment to
near-term science-based targets and long-term net zero targets.
By implementing this roadmap, the Group aims to reduce its exposure
to climate-related transition risks and strengthen its ability to capture
opportunities while investing in renewable energy generation at
key assets.
While environmental risk was added to our emerging risks register
for the first time in 2021, this has been mitigated 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 and
Compliance Committee of the Board. It is also considered as part
of the Risk and Compliance Committee’s biannual review of risks
across the Group. The Board is committed to continuing 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 2023
101
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: encompasses the principal risks which
were applied to the base case; and
the reverse stress-test scenario: 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.
Under Scenario 1, the following risks were factored in:
• remaining competitive (risk number 1): in considering the ongoing
legal dispute with Caliplay (Note 7), a significant and valued
customer of the Group, we considered the remote probability
that no further cash is received from Caliplay over the viability
statement period;
The impacts applied to this scenario were offset by potential
savings such as reducing capital expenditure. Under this scenario,
which showed a monthly average decrease in Adjusted EBITDA of
46% over the three-year period, the Group would need to extend
(past October 2026) its RCF facility to be able to utilise it until the end
of 2026 or take out a new bond as the 2019 Bond is due for repayment
in March 2026. Either way and as mentioned above, the Directors
are confident that refinancing can be achieved at acceptable terms,
and, even though currently no formal proposal has been put forward
to the Board as it is too soon, the Group is in regular dialogue with its
existing banks and is continuously reviewing its options. Finally, under
this scenario, the Group was still able to meet its financial covenants
under its RCF and bonds, 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 (if any). 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
would not be able to repay. This scenario indicated that Adjusted
EBITDA would need to decrease on average by 86% over the three-
year period at each bank reporting date for the Group 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
2023 as discussed in the Chief Financial Officer’s Review.
• building a sustainable business (risk number 5), being the risk
of delays in launching and expanding in US and certain LATAM
countries due to regulation or competition; this was specifically
considered because the impact could be high; and
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 three-year
period to 31 December 2026.
• 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 Strategic Report on pages 1 to 102 was approved by the Board
and signed on its behalf by Mor Weizer and Chris McGinnis.
Mor Weizer
Chief Executive Officer
26 March 2024
Chris McGinnis
Chief Financial Officer
102 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Governance Report
Governance Report
Governance Report
104 Chairman’s introduction to governance
106 Governance at a glance
108 Board of Directors
110 Directors’ governance report
124 Audit Committee report
Remuneration Report
129 Statement by the Committee Chair
131 Directors’ Remuneration Policy
136 Annual report on remuneration
146 Directors’ report
Playtech plc Annual Report and Financial Statements 2023
103
Governance Report
Chairman’s introduction to governance
Progress driven by responsibility
and sustainability
Strategy and performance
The Governance Report describes how the
Board and its Committees operated during
2023. Following our progress in 2022 to
define our strategic aims clearly, the Board
has remained focused on ensuring the
Company continues to deliver its strategy
and operational performance and makes
progress towards its sustainability strategy
for the benefit of all its stakeholders.
During the year, the Board considered and
approved strategic investments that will
support the business’ long-term growth,
including investment in Hard Rock Digital
and targeted acquisitions for Snaitech. The
Board continued to pay close attention to
maintaining a strong financial position to
ensure we remain well placed to pursue
strategic opportunities.
The Board was heavily engaged with
the Executive Management team in
overseeing the delivery of our strategy, with
a particular focus on the B2B business on
structured agreements to deliver growth
in newly regulating markets, as well as the
opportunities to capitalise on Live and our
SaaS model and deliver efficiencies in B2B.
The Board’s progress was underpinned
by the excellent work of its Committees,
including strategic deep dives on People and
Talent and Safer Gambling, both of which are
central to our sustainability strategy.
In our Strategic Report, we have set out how
we seek to manage the principal risks and
uncertainties facing the business.
The Board recognises the challenging times
many of our colleagues face and has been
very cognisant of supporting our colleagues
and their wellbeing. The Board has responded
to these challenges by approving continuous
support for colleagues affected by the war in
Ukraine and Hamas-Israel war. To address
the cost-of-living crisis, the Board supported
management in approving a one-off payment
for our most affected colleagues and creating
a Benevolent Fund to support our colleagues
who may be affected by particularly
challenging and unforeseen life events. The
Board will continue to monitor developments
and support our colleagues and local
communities. We continue to support many
local charities through our Global Community
Investment Programme.
Board composition, changes
and diversity
During the year, there have been changes
to the composition of the Board.
In January 2023, we welcomed Samy Reeb
to the Board as a new independent Non-
executive Director, bringing his extensive
experience of working with global
businesses across wealth and tax advisory.
On 17 May 2023, we announced John
Krumins’ intention to step down from the
Board and his position as Chair of the Audit
Committee on 29 September 2023, following
the interim results to enable a smooth
transition. On behalf of all the Directors,
I would like to thank John for his commitment
and dedication during a period of significant
change for the Company. We wish John all
the best in his future endeavours.
Ruby Yam was appointed in June 2023
and stepped down in July 2023 for
personal reasons.
As a Board, we bring a diverse range of
experience, skills and perspectives and
continue to evolve to ensure that we have the
necessary skills and strategic leadership to
continue to successfully guide the Company.
Promoting integrity and inclusive culture is a
crucial pillar of our sustainability strategy and a
priority of the Board. We have made progress
towards developing the diversity of our
workforce and the Board, including introducing
our Board Diversity Policy and continuing
engagement with our external Stakeholder
Advisory Panel, but recognise there is more to
be done to make meaningful progress.
While we took steps to address the gender
balance of the Board this year, we have yet to
meet our targets and have more work to do.
The Board, together with the Nominations
Committee, is prioritising addressing the
Board’s diversity.
The Board supports the management team
to drive a culture of integrity and inclusion.
The Board and the Chair of the Sustainability
Committee, Linda Marston-Weston, have
been working closely with our Global Head of
HR to assess our employee engagement, and
our values and culture. Talent development
and succession planning are also ongoing
topics in the work of the Board and its Committees.
Brian Mattingley
Chairman
Dear Shareholder
As Chairman of the Board, I am pleased to
present the Corporate Governance Report
for 2023.
We began 2023 looking forward with
cautious optimism as we continued to
navigate the many challenges Playtech and
our industries have encountered in recent
years: from the war in Ukraine, the rising
cost of living and the economic downturn,
to the continued impacts of climate change,
political polarisation and the lasting effects
of the pandemic. However, it was a year of
further challenges with October 7th terrorist
attack in Israel, Hamas-Israel war, litigation
with Caliplay, economic headwinds and
inflationary environment.
Against this challenging backdrop, on
behalf of the Board, I would like to thank
the Executive Management and the
broader team for their hard work, resilience
and commitment throughout 2023 to
achieve excellent strategic, financial
and operational results.
104 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Sustainability and
stakeholder engagement
Central to Playtech’s progress and growth
has been a track record of open and constructive
dialogue with its stakeholders. In 2023,
the Board has continued its high levels of
engagement with shareholders to ensure
significant progress on corporate governance
and that the Company’s interests are aligned
with 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
our workforce to continue to deliver the
strategic and operational progress that we
have achieved in recent years. This balance
lets us clearly focus on the key risks the
Group faces. Still, it 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.7,700 colleagues in 19 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.
This year, we have made significant progress
against the sustainable priorities to power
action for positive environmental impact. The
Board approved a new Environment Policy
and endorsed our Net Zero 2040 plan.
You can read more on our sustainability strategy on
pages 48 to 87
Conclusion
The Board has confidence in the future
of the Group and sees significant growth
opportunities ahead. The operational
progress reported in 2023 in new and
existing regulated markets, including the
US, is evidence of Playtech’s leadership in
regulation and compliance in the gambling
industry, and our commercial capabilities.
The Board plays an essential role in upholding
the highest levels of regulation, compliance
and responsibility. We continue to work
closely with regulators in various markets
to ensure our compliance with local laws
and regulations.
The Board strives 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, how it conducts
itself, its attitude towards sustainability, safer
gambling and diversity and inclusion, its
definitions of success and its assessment
of appropriate risk, all of which define the
atmosphere within which the Executive
Team works.
The following report provides further details
on our governance framework, thereby
explaining how our corporate governance
practices support our strategy.
AGM
The AGM is an important opportunity
for the Board to meet with shareholders,
particularly those who may be yet to have the
chance to engage with the Board and senior
management. Our AGM is scheduled to be
held on 22 May 2024. Further meeting details
are included in the Notice of Annual General
Meeting. Shareholders are always welcome
to ask us questions or feedback via our
website or at our AGM.
Brian Mattingley
Chairman
26 March 2024
Workforce
engagement
A highlight of 2023 was the opportunity
for the Board members to visit two of our
sites, the US and Latvia, to engage with
our colleagues. Our team in the US has
grown rapidly, and we have established
three Live studios. Chris McGinnis,
Chief Financial Officer, and I were able
to spend time with our US team and visit
our Michigan studio.
Latvia is home to our largest Live facility
with over 1,800 colleagues and the latest
Live innovations. The Board and the
Executive Management team travelled
to Latvia to host engagement sessions
with different groups of colleagues and
present the Group’s strategic aims.
The Board also attended ICE and G2E,
where we engaged with many of our
stakeholders and colleagues from
around the world.
You can read more about our stakeholder
engagement on pages 44 to 47
Playtech plc Annual Report and Financial Statements 2023
105
Governance Report
Governance at a glance
Key highlights
Governance improvements
•
Increased workforce engagement through site visits
and deep-dive sessions.
• Designated Linda Marston-Weston as workforce
engagement representative.
Read more on our workforce engagement on page 105
• Focused on improving internal controls and risk management.
Read more on pages 96 and 128
• Continued progress on our sustainability strategy.
Read more on pages 48 to 87
Focus areas in 2023
Strategy
Regulation
and safer
gambling
Acquisitions
Litigation
People
Priorities for 2024
Growth
• Deliver strategic aims and pursue targeted investments.
Efficiency
• Realign resources in B2B.
Culture
• Confirm and embed our values across the Group.
Finance
Technology
Sustainability
• Continued progress on our sustainability strategy.
Read more on pages 114 and 115
2023 Board engagement
10Site visits
Read more on page 120
5Tradeshows 4Deep-dive sessions
Board changes
• John Krumins stepped down from the Board on
29 September 2023, and his position as Chair of the
Audit Committee and member of the Risk and Compliance
Committee and Sustainability Committee.
Relevant industry experience
Finance
PLC experience
Directors’ skills and experience
• Ruby Yam was appointed to the Board on 1 June 2023 and
Senior leadership experience
stepped down on 11 July 2023 for personal reasons.
NED experience
4
• Samy Reeb was appointed to the Board on 4 January 2023.
Read more on Board Committee changes on page 117
106 Playtech plc Annual Report and Financial Statements 2023
5
5
7
7
Governance Report
Board composition
Independence
Chairman
Executive Directors
Non-executive
Directors
0-2 years
2-6 years
7-9 years
9+ years
1
2
4
2
4
0
1
Tenure
Read more on pages 108 to 113
Nationality
Independent NED
4
American
British
Canadian and British
French
Israeli
1
3
1
1
1
Diversity
The tables below illustrate the diversity of the Board as at 31 December 2023.
Gender identity
Men
Women
Not specified/prefer not to say
Total
Ethnic background
White British or White other
(including minority White groups)
Mixed/multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
Total
Read more on page 113
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chairman)
Number in
Executive
Management
Percentage
of Executive
Management
5
2
—
7
Number of
Board members
6
—
—
—
1
—
7
71%
29%
—
100%
Percentage
of the Board
86%
—
—
—
14%
—
100%
4
—
—
4
7
4
—
11
Number of senior
positions on the
Board (CEO, CFO,
SID and Chairman)
Number in
Executive
Management
3
—
—
—
1
—
4
7
—
1
—
1
2
11
64%
36%
—
100%
Percentage
of Executive
Management
64%
—
9%
—
9%
18%
100%
Playtech plc Annual Report and Financial Statements 2023
107
Governance Report
Board of Directors
Brian Mattingley
Non-executive Chairman –
Independent on appointment
N
Mor Weizer
Chief Executive Officer
Chris McGinnis
Chief Financial Officer
Appointment to the Board
Appointment to the Board
Appointment to the Board
Brian was appointed to the Board
in June 2021.
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 the Gala
Group of companies and
eventually becoming a CEO of
Gala Regional Developments, a
joint venture enterprise between
Gala and Caesars of the US. Brian
had also held senior management
positions in 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.
Current external commitments:
None.
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.
Chris is also a member of the
Disclosure Committee.
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) charter-holder.
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.
Current external commitments:
None.
Mor was appointed as
Playtech’s Chief Executive
Officer in May 2007.
Career
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 high-tech
environment and extensive
knowledge of the online
gambling industry.
Current external commitments:
None.
Ian Penrose
Senior Independent
Non-executive Director
A R N Ri
Appointment to the Board
Ian was appointed to the Board in
September 2018.
Career
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.
Current external commitments:
Non-executive Director
IXUP Limited.
Non-executive Director Phenix
Real Time Solutions Inc.
Vice Chairman of Weatherbys
Limited and Non-executive
Director of its technology joint
venture with the British
Horseracing Authority, Racing
Digital Limited.
Board Advisor to KYC Global
Technologies Limited.
108 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Key to committees
A Audit Committee
S Sustainability and Public
Policy Committee
N Nominations Committee
R Remuneration Committee
Ri
Risk and Compliance
Committee
Committee Chair
Notes
John Krumins stepped down from his role as
Non -executive Director on 29 September 2023.
Ruby Yam stepped down from her role as
Non-executive Director on 11 July 2023.
Anna Massion
Independent Non-executive
Director
Linda Marston-Weston
Independent Non-executive
Director
Samy Reeb
Independent Non-executive
Director
S N
R Ri
Appointment to the Board
S A R
Appointment to the Board
Ri
A S
Appointment to the Board
Anna was appointed to the Board
in April 2019.
Linda was appointed to the Board
in October 2021.
Samy was appointed to the Board
in January 2023.
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.
Skills, competences
and experience
With Anna’s sector knowledge and
business network, she brings a
strong fiscal and analytical skill set
to the Board.
Current external commitments:
Non-executive Director of
AGS LLC.
Non-executive Director of
Betmakers Technology Group Ltd.
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. Until
recently Linda was 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.
Current external commitments:
Non-executive Director of Gaming
Realms plc.
None.
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. Samy is currently
Group CEO of PFIS Group.
Skills, competences
and experience
Samy’s broad skill set and
extensive knowledge of Asia
provides additional depth and
experience to the Board.
Current external commitments:
None.
Playtech plc Annual Report and Financial Statements 2023
109
Governance Report
Directors’ governance report
Introduction
Responsibility for corporate governance lies with the Board, which is committed to maintaining high standards of corporate governance, which it
considers to be central to the delivery of long-term sustainable growth, effective stewardship of the business and maintaining the confidence of
stakeholders. The following report explains the role of the Board, how it functions, and our most important governance processes and how they
support the Group’s business and the Board’s stakeholder engagement.
UK Corporate Governance Code
As a premium listed company, Playtech’s governance framework is based on the UK Corporate Governance Code 2018 (the “Code”). A copy of
the Code is available at www.frc.org.uk. This report and the Board Committee reports set out how we have applied the principles and complied
with the provisions of the Code during 2023. The table below shows where disclosures to evidence this can be read. Where elaboration is
required, further details are set out in our Compliance Statement.
Board leadership and purpose
Compliant
Read more on pages
Long-term value and
sustainable success
Purpose, values and strategy
Integrity and culture
Resources and effective controls
Stakeholder engagement
Policies and practices
Division of responsibilities
Structure and effectiveness
Independence
Division of responsibilities
Time commitments
Company secretary support
Composition, succession and evaluation
Length of service
Appointments and succession planning
Skills, experience and knowledge
Evaluation
Diversity
Audit, risk and internal control
Internal and external audit
Integrity of financial and narrative
statements
Fair, balanced and understandable
assessment
Risk and internal controls framework
Principal risks
Remuneration
Policies and practices
Alignment with purpose, values
and long-term strategy
Formal and transparent procedure
Independent judgement and discretion
110 Playtech plc Annual Report and Financial Statements 2023
1 to 102
1 to 102
48 to 87
110 to 151
44 to 47
110 to 123
110 to 123
111
112
111
111
121 and 122
108 and 109
108 and 109
122
113
124 to 128
123
146
96 and 128
95 to 100
131 to 135
129 to 135
129 to 135
135 and 143
Compliance statement
I am pleased to be able to report that it is the view of the Board
that the Company is fully compliant with the principles of the
Code throughout the year under review.
As we reported in our last Annual Report, 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 contributions to our wider workforce.
Workforce engagement
In accordance with the principles of the Code, provision 5
explains that for engagement with the workforce, one or
a combination of the following methods should be used: a
director appointed from the workforce, a formal workforce
advisory panel, or a designated non-executive director. In
2022, we reported that we were considering arrangements
for workforce engagement. The Board has designated
Non-executive Director, and Chair of the Sustainability and
Public Policy Committee, Linda Marston-Weston to oversee
workforce engagement.
AGM results
Following the results of our AGM held in May 2023, the Board noted
in its announcement dated 24 May 2023 that certain resolutions were
not passed with the necessary majority. These resolutions concerned
the Directors’ power to allot shares, disapplication of pre-emption
rights, further disapplication of pre-emption rights, and power to make
market purchases of own shares.
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.
A statement setting out our response to the voting figures from last year’s
AGM was uploaded to the Investment Association portal.
Conflicts of interest
During the year under review, the Directors declared no conflicts
of interests.
External auditor statement
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 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 in this report describe how the Group
applies the principles identified in the Code.
Governance Report
How we are governed
Board composition
As at 31 December 2023, 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 2023 and their
responsibilities are set out on pages 108 and 109.
Except for John Krumins, who stepped down in September 2023,
and Ruby Yam, who was appointed in June 2023 and stepped down
in July 2023, the Directors served throughout the financial year.
Director’s name
Title
Brian Mattingley
Non-executive Chairman
Mor Weizer
Chris McGinnis
Ian Penrose
Anna Massion
John Krumins
Executive Director, Chief Executive Officer
Executive Director, Chief Financial Officer
Senior Independent Director, Non-
executive Director
Non-executive Director
Non-executive Director
(from 2 April 2019 to 29 September 2023)
Linda Marston-Weston
Non-executive Director
Samy Reeb
Ruby Yam
Non-executive Director
(from 4 January 2023)
Non-executive Director
(from 1 June 2023 to 11 July 2023)
Balance of the Board
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 and
its stakeholders.
The Board considers that it is of a size and has the balance of
skills, knowledge, experience, diversity 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.
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 whom the Board
has appointed 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.
Independence
The Board, together with the Nominations Committee, reviews the
independence of each Non-executive Director annually, considering
their individual circumstances and external appointments, and any
conflicts of interest or relationships that are likely to, or could appear
to, affect the Director’s independent judgement. Each Non-executive
Director is asked to provide confirmation of their independence annually.
Following the annual assessment, the Board considers that all the
Non-executive Directors are independent of management and free
of any relationship that could materially interfere with the exercise
of their independent judgement, or ability to provide constructive
challenge and hold management to account.
In accordance with the Code, the Chairman, Brian Mattingley, was
independent upon his appointment in 2021. The Board considers the
Chairman retains objective judgement.
Time commitments
The Board considers that all Directors have demonstrated sufficient
availability and time commitment throughout the year for the proper
functioning of the Board.
In addition to the scheduled and ad hoc Board and Committee
meetings, Directors also attend the Annual General Meeting. Non-
executive Directors are encouraged to attend tradeshows, including
ICE and G2E, and undertake company site visits, both of which our
Executive Directors attend.
The Board must approve all significant external appointments before
any Director accepts the position, having regard to the combined
time commitments. In addition, for Executive Directors additional
appointments should be beneficial to the Group, not present a conflict
of interest or require a significant time commitment which could
interfere with the performance of their duties.
Company Secretary
The Company Secretary acts as secretary to the Board and its
Committees. Appointment and removal of the Company Secretary
is a matter for the Board. The Company Secretary is a member of
the Group’s Executive Management team and all the Directors have
access to his advice and services.
Playtech plc Annual Report and Financial Statements 2023
111
Governance Report
How we are governed continued
Division of responsibility
The Group has clear divisions of responsibility between the Chairman (Brian Mattingley) and the Chief Executive Officer (Mor Weizer) and sets
out what is expected of the Non-executive Directors to support the development of the Group’s strategy and the integrity of its operations.
Chairman
Chief Executive Officer
• Overall effectiveness of the running of the Board
• Executive leadership of the Company’s business on a
• Ensuring the Board is an integral part of 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 the
Board level
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
Service contracts and exit payments
Provision
Detail
Executive Directors
Set out in the table below are the key terms of the Executive Directors’
terms and conditions of employment.
Remuneration
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).
Change of control
Notice period
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.
Termination payment
Salary, bonus, LTIP, benefits and
pension entitlements in line with
the above Directors’ Remuneration
Policy table
No special contractual provisions apply
in the event of a change of control
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
Restrictive covenants
During employment and for
12 months thereafter
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.
Name
Date
Term
Termination
Brian Mattingley
1 June 2021
Until third AGM after appointment
Linda Marston-Weston
1 October 2021
Until third AGM after appointment unless not re-elected
Ian Penrose
1 September 2018
Until third AGM after appointment unless not re-elected
Anna Massion
2 April 2019
Until third AGM after appointment unless not re-elected
Samy Reeb
4 January 2023
Until third AGM after appointment unless not re-elected
180 days’ notice on either side or if not
re-elected or commits gross misconduct
90 days’ notice on either side or if not
re-elected, disqualified or commits
gross misconduct
112 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Diversity
As stated in last year’s report, in 2022, we refreshed our approach
to promoting diversity, equity and inclusion across our leadership
and workforce. The Company continues to operate in numerous
countries, each with a distinct culture. Our aim continues to focus on
each individual and celebrate our workforce’s differences and cultural
diversity. Diversity and inclusion are part of our corporate culture and
we have set about 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 1 to 102.
In 2022, the Board also approved a new Board Diversity Policy, which
codifies the Board’s commitment to make diversity a key factor as
we review the recruitment and succession at the Board. The Policy
is available to view at www.playtech.com. In summary, the Board
Diversity Policy sets out a commitment to:
• build a culture of inclusion and diversity and promoting this with the
Executive Committee and workforce;
• make diversity and inclusion a guiding principle when reviewing the
composition and structure of the Board and Executive Committee;
•
increase the diversity of the Board, including, but not limited to,
an increase of Directors who identify as female to at least 40% by
2025 and at least one Director who identifies as a member of an
underrepresented group;
• engage with the workforce to enhance and strengthen its approach
to bring diverse perspectives to Board level decision making; and
• review and monitor the application of equality, diversity and
inclusion as part of recruitment and succession planning for
executive and management leadership roles.
The Board continued to make progress towards becoming more
diverse in 2023. Due to changes in the Board composition, the Board
has not yet achieved the target balance and has further work to meet
its targets and make meaningful progress. The Board, together with
the Nominations Committee, will continue to make diversity a key
factor in the recruitment and succession of the Board. Read more on
our approach to succession planning on pages 121 and 122.
As a premium listed company, Playtech is required to comply with
the Listing Rules and Disclosure Guidance and Transparency Rules.
In accordance with the Listing Rules, the Company is required to
comply with or explain why it has not met the diversity requirements in
LR 9.8.6R(9) and LR 14.3.33R(1), including the following elements:
Diversity
At least 40% of the Board are women
As at 31 December 2023, the percentage of women on the Board of
Playtech is 29%, below the target of 40%.
Last year’s report stated that the Board was taking steps to increase
its diversity. During the year, Playtech appointed an additional female
to the Board, Ruby Yam. However, as reported on page 111, Ruby
stepped down from the Board after a short tenure. In its succession
planning, the Board, together with the Nominations Committee, is
considering the gender diversity of the Board and seeks to meet the
targets for female representation by 2025.
At least one of the senior Board positions is a woman
None of the senior Board positions (Chair, CEO, CFO or SID) are held
by a woman as of 31 December 2023. The Board considers that the
Directors holding senior Board positions, as detailed on pages 108
and 109, are the most appropriate to fulfil these clearly defined and
specific roles for Playtech, having regard to their experience, skills and
competencies, and the composition of the Board as a whole.
At least one member of the Board is from a minority ethnic background
As at 31 December 2023, one of the Directors is from a minority
ethnic background.
The Nominations Committee believes that appointments should be
based on merit, compared against objective criteria, to ensure the
Board has the right skills, knowledge and experience that enable it
to discharge its responsibilities properly. Considering the Group’s
stakeholders, the Board considers the Directors bring a diverse range
of perspectives which are complementary to and appropriate for the
Group’s current business.
Methodology for diversity data collection
The Board and Executive Management Committee gender diversity
data is set out on page 113. This data is correct as at 31 December 2023.
The individual Directors and management were asked by the
Company Secretary and Global Head of HR, respectively, to provide
the data for the purpose of the reporting requirement in LR 9.8.6R(9)
and LR 14.3.33R(1). There has been no change to the diversity data
between the date on which this data was collected and this report’s
publication date.
The tables below illustrate the diversity of the Board as at 31 December 2023.
Gender identity
Men
Women
Not specified/prefer not to say
Total
Ethnic background
White British or White other
(including minority White groups)
Mixed/multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
Total
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
Executive
Management
Percentage
of Executive
Management
5
2
—
7
Number of
Board members
6
—
—
—
1
—
7
71%
29%
—
100%
Percentage
of the Board
86%
—
—
—
14%
—
100%
4
—
—
4
7
4
—
11
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
Executive
Management
3
—
—
—
1
—
4
7
—
1
—
1
2
11
64%
36%
—
100%
Percentage
of Executive
Management
64%
—
9%
—
9%
18%
100%
Playtech plc Annual Report and Financial Statements 2023
113
Governance Report
How the Board functions
Board meetings
Independent professional advice
The Board meets regularly with eight meetings scheduled and held
in 2023. In addition, the Board held several presentations and informal
calls throughout the year to maintain coverage of key business
developments, emerging issues and opportunities. The Board held
one of its scheduled meetings in Latvia as part of its commitment to
workforce engagement.
The minutes of each of these Committees are circulated to and
reviewed by their members. Matters arising are circulated to
accountable individuals.
Details of the Directors’ attendance at Board meetings and Committee
meetings are set out in the table on page 114. The Nominations
Committee and Disclosure Committee do not have scheduled
meetings and meet as needed.
Arrangements are facilitated should a Board decision or approval
be required outside these times. In 2023, the Board held two ad hoc
meetings remotely to consider significant transactions.
Where a Director or attendee cannot attend a meeting, feedback is
sought in advance by the relevant Board or Committee Chair and
Company Secretary, and a debrief is offered thereafter.
During the year, the Chairman met the other Non-executive Directors
in person and remotely, in the absence of the Executive Directors, to
re-confirm and take account of their views.
Timely flow of information
All Directors receive an agenda and comprehensive papers in the
week prior to the Board meeting. Papers are delivered via a secure
electronic portal.
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 2023 are set out on page 115.
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 Chief Compliance Officer,
the Head of Investor Relations and the Chief Sustainability and Public
Policy Officer, 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 upon by the Board and a follow-up
procedure ensures their completion.
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.
Delegation of authority
The Board has adopted a formal delegation of authorities
memorandum which sets out levels of authority for employees in
the business.
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.
Summary of matters reserved for
Board consideration:
• 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;
• ensuring the maintenance of a sound system of internal control
and 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;
• corporate governance matters; and
• sustainability, people and talent.
Attendance of members
Director’s name
Brian Mattingley
Mor Weizer
Chris McGinnis
Ian Penrose
Anna Massion
John Krumins
Linda Marston-Weston
Samy Reeb
Ruby Yam
Board
8 of 8
8 of 8
8 of 8
8 of 8
8 of 8
6 of 6 1
8 of 8
8 of 8
1 of 1 2
Audit
Remuneration
Nominations
—
—
—
8 of 8
—
7 of 7 1
8 of 8
1 of 1 *
—
—
—
—
4 of 4
4 of 4
—
4 o f 4
—
—
1 of 1
—
—
—
1 of 1
1 of 1
—
—
—
Risk
—
—
—
2 of 2 *
2 of 2
2 of 2
—
—
—
ESG
—
—
—
3 of 3
1 of 1 *
3 of 3 1
4 of 4
1 of 1 *
—
114 Playtech plc Annual Report and Financial Statements 2023
1
John Krumins stepped down from the Board and his position as Chair of the Audit Committee on
29 September 2023.
2 Ruby Yam was appointed to the Board on 1 June 2023 and stepped down on 11 July 2023.
* Please see the section on Committee changes on page 117 for further details.
Governance Report
Matters considered by the Board in 2023
January
February
March
• Review of financing options
• Update on Caliplay
Investment in Brazil
•
•
Investment in Hard Rock Digital
• Snaitech trading update
•
Investment in Hardrock Digital
• Report from the Audit Committee
• Approval of preliminary announcement
and financial statements for
31 December 2022
• Shareholder voting considerations
• Review of Asia business
• Update on US business
• New market opportunities
• SaaS Platform
June
• Live vertical strategy
• Bond offering update
• M&A update
• People and Talent
• LatAm regulation update
• Holland Casino review
• Net Zero plan
May
• Annual General Meeting
• Trading update
• Review of shareholder voting
• M&A update
• Structured agreements
April
• Review of LatAm business
• Review of Tax Strategy
• Ukraine
July
August
September
• B2B business transformation
project update
• M&A update
• Review of structured agreements
• Operations update
• Snaitech trading update
• Tax update
• Legal update
• Caliplay update
• Safer Gambling
• Report from the Audit Committee
Interim results and presentation
•
December
• Budget 2024
November
• Board evaluation
• Budget 2024
• Board training
• Caliplay update
October
• Caliplay update
• Snaitech bid for acquisition of SKS365
Playtech plc Annual Report and Financial Statements 2023
115
Governance Report
Our governance framework
The Board
The Board is collectively responsible for the long-term success of the Company. The Board provides entrepreneurial leadership for the Group and sets its
strategic aims, purpose, values and standards. The Board oversees the Group’s prudent and effective internal controls and risk management framework.
The Board ensures the necessary resources are in place for the Company to meet its objectives and reviews management performance.
ˆRead more on the Board’s governance on pages 111 and 112 and read the Directors’ biographies on pages 108 and 109
Committees
The Board has established five formal Committees, which focus on their areas of expertise, enabling the Board to focus on strategy,
performance, leadership and stakeholder engagement. The terms of reference for the Committees are available on the website
www.investors.playtech.com/corporate-governance/our-committees. The Committees make recommendations to the Board following their meetings.
Audit
Nominations
• Provides effective governance over the integrity of the Group’s financial
• Reviews the structure, size, composition and diversity of the Board
reporting, including the adequacy of related disclosures;
and its Committees;
• monitors the performance and effectiveness of the Internal
Audit function;
•
reviews external audit independence and performance;
• ensures the Annual Report and Accounts is fair, balanced and
understandable; and
•
reviews the management of the Group’s systems of internal control,
business risks and related compliance activities.
Read more in the Audit Committee’s Report on pages 124 to 128
Remuneration
• makes recommendations for any changes considered necessary in
the appointment, reappointment and removal of Directors to/from
the Board and its Committees and ensures rigorous and transparent
processes are in place;
•
reviews the senior leadership needs of the Group to enable it to
compete effectively in the marketplace;
• advises the Board on succession planning for Executive Director
appointments, although the Board itself is responsible for succession
generally; and
• supports development of a diverse succession pipeline and oversees
policy on diversity and inclusion.
• Makes recommendations to the Board on the Remuneration Policy
for the Chairman, Executive Directors and senior management; and
Risk and Compliance
•
reviews workforce remuneration-related policies and oversees
alignment of incentives and rewards with culture.
• Determines the risk management strategy and reviews management’s
identification and mitigation of key risks and uncertainties;
Read more in the Remuneration Report on pages 129 to 145
• monitors the risk assessment programme;
Sustainability and Public Policy
• Provides governance over the environmental, social and governance
(ESG) considerations, continued effectiveness of the ESG strategy,
and its implementation;
•
reviews and makes recommendations to the Board on targets,
policies and disclosures of ESG matters;
• monitors stakeholder engagement and sentiment towards ESG
matters and liaises with other Committees as appropriate; and
• works closely with the Audit Committee regarding oversight and
assurance of environmental disclosures (the Chair of the Committee
is also a member of the Audit Committee).
Read more in our Sustainability Report on pages 48 to 87
• ensures structures, processes and responsibilities for identifying and
managing risks are adequate;
• provides oversight and approval of relevant policies for the Group;
• monitors changes to the regulation of online gambling and the
assessment of licensees’ suitability;
• monitors ongoing compliance with the conditions of the regulatory
licences held by the Group and any incidents and remedial
activity; and
• works closely with the Audit Committee in carrying out its
responsibilities (the Chairman of the Audit Committee is also a
member of the Committee).
Read more on the activities of the Risk and Compliance Committee
on pages 95 to 100
Disclosure
The Disclosure Committee ensures the accuracy and timeliness of the Company’s public announcements and monitors the Company’s obligations
under the Listing Rules and Disclosure Guidance and Transparency Rules of the FCA. Meetings are held as required. Standing members of the
Committee are set out on page 117.
Executive Management
As the key management committee for the Group, the Executive Management 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.
Details of the standing members of the Committee are set out on page 117.
116 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Our Committees
Committee composition
Executive Committee membership
The Board has established five formal Committees, each focusing
on its own area of expertise. The Committees’ responsibilities are
set out in our governance structure on page 116. These Committees
enable the Board to focus on strategy, performance, leadership and
stakeholder engagement. After their meetings, the Committees make
recommendations to the Board.
The remit, authority and composition of each Committee are laid out
and reviewed regularly to ensure that the support provided to the Board
is effective. The Board considers the composition of the Committees
reflects the Directors’ experience, skills and competencies.
When necessary, the Board may delegate particular matters to
ad hoc sub-Committees with clearly defined responsibilities and for
a limited time.
The 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
and Corporate Affairs Officer) and Brian Moore (Company Secretary).
Other members of senior management are invited to the Committee
as and when required.
Disclosure Committee membership
The Disclosure Committee meets as needed. At the date of this report
the Disclosure Committee comprises Ian Penrose (Chair of the Audit
Committee), Chris McGinnis (Chief Financial Officer), Alex Latner
(General Counsel) and Brian Moore (Company Secretary).
Internal Audit
PwC LLP, in its capacity as provider of co-sourced internal audit services,
may be invited to attend meetings of the Audit Committee to present
matters or for the Committee to have the benefit of its experience.
Board Committee membership
The table below details the membership of the Committees as of 31 December 2023.
Committee membership
Audit
Remuneration
Nominations
Risk and Compliance
Sustainability and Public Policy
Brian Mattingley
Ian Penrose
Linda Marston-Weston
Anna Massion
Samy Reeb
Standing attendees
Chair
Member
Company Secretary
Company Secretary
Company Secretary
Director of Internal
Audit
Director of Internal
Controls and Risk
Company Secretary
General Counsel
Director of Internal
Audit
Chief Data Privacy
Officer
Company Secretary
Chief Sustainability
and Public Policy
Officer
Board Committee changes during the year
During 2023, the following changes to the Committees were implemented with effect from 29 September 2023:
•
Ian Penrose assumed the Chair of the Audit Committee and was appointed to the Nominations Committee while stepping down from the
Sustainability and Public Policy Committee.
• Samy Reeb was appointed to the Audit and Sustainability and Public Policy Committees and assumed the Chair of the Risk and Compliance
Committee, replacing Anna Massion.
• Anna Massion became the Chair of the Remuneration Committee, replacing Ian Penrose, and was also appointed to the Sustainability and
Public Policy Committee.
Between 1 January 2023 and 29 September 2023, the Committee composition was as follows:
• The Audit Committee was chaired by John Krumins and Ian Penrose, and Linda Marston-Weston were members of the Committee.
• The Nominations Committee was chaired by Brian Mattingley and Anna Massion and Ian Penrose were members of the Committee.
• The Remuneration Committee was chaired by Ian Penrose and Anna Massion and Linda Marston-Weston were members of the Committee.
• The Sustainability and Public Policy Committee was chaired by Linda Marston-Weston and Ian Penrose and John Krumins were members of
the Committee.
• The Risk and Compliance Committee was chaired by Anna Massion and Ian Penrose and John Krumins were members of the Committee.
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Considering stakeholders from the Board’s perspective
The Board regularly engages, directly and indirectly, with a wide range of stakeholders throughout the year to understand current and evolving
issues of interest, engaging constructively, responding and ensuring that the Company takes stakeholder perspectives into account when
making short and long-term decisions. Our stakeholder engagement is set out on pages 44 to 47 of the Strategic Report.
The table below specifies the Board’s engagement activities and how it is kept informed.
Colleagues
Shareholders and bondholders
Customers
How the Board seeks to engage
• Direct engagement through site visits to the
US and Latvia, providing the opportunity to
see the culture in operation and host strategy
alignment sessions.
Read more on our site visits on page 105
• Attendance at tradeshows providing opportunity
to meet with colleagues from around the globe.
•
Indirect engagement through feedback
from employee engagement surveys and
HR briefings.
• Direct informal engagement attending site
lunches, town halls and local events.
• The Board approved the creation of the
Benevolent Fund for colleagues in need and
one-off cost-of-living payments to eligible
employee groups.
How the Board is kept informed
• Regular Board updates from the COO and HR
on employee issues and engagement with them
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.
• Feedback from employee engagement surveys
and updates particularly considering the current
geopolitical events.
• Briefings on issues raised through the Speak
Up/whistleblowing hotline.
• The Board held a People and Talent deep-dive
session led by the Global Head of HR.
• Direct engagement by meeting with
• Direct engagement by face-to-face engagement
shareholders throughout the year, though
primary responsibility for effective
communication with shareholders lies with
the Chairman.
• The Executive Directors prepare a general
presentation for analysts and institutional
shareholders following the interim and
full-year announcements and following
significant acquisitions.
• Attendance at the AGM and responding
to questions.
• Answering all queries raised by
shareholders promptly.
at tradeshows.
•
Indirect engagement through regular
review of business development
opportunities, operational performance
and incident management.
• The Board held deep-dive sessions on
structured agreements, Live and SaaS Platform.
•
Indirect engagement by monitoring industry
trends and developments.
• Regular operations updates and reports
from the COO.
• Regular trading updates from Snaitech on
performance including HAPPYBET and
provided strategic guidance.
• COO is a standing attendee at Board meetings
and regularly updates the Board.
• Presentations from product verticals on strategy
and technology innovations.
• Briefings with functional leaders about emerging
and live stakeholder issues.
• Regular updates and reports from the Head of
Investor Relations on related matters, issues
of concern to investors, and analysts’ views
and opinions.
• Regular updates and reports on engagement
activities over the year with investors.
• Chair, CEO, CFO and SID met with several
shareholders to discuss the Company’s
business and remuneration strategies
throughout the year.
• 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.
• The Board reviewed and considered significant
acquisition and investment opportunities
throughout the year, resulting in the successful
completion of the investment in Hardrock Digital.
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. Board members, Executive Directors and members of the IR team participate in a number
of investor events, attend industry tradeshows, 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.
118 Playtech plc Annual Report and Financial Statements 2023
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Suppliers and
technology partners
Regulators and policy makers
Society and communities
•
•
•
Indirect engagement through review of
operational updates, performance and
incident management.
Indirect engagement through review
and approval of material supply and
procurement contracts.
Indirect engagement through review
and approval of the Modern Slavery
Statement, Supplier Code of Conduct and
Environment Policy.
• Audit Committee reviewed the IT
security strategy.
• The Board initiated a business transformation
project for the B2B business, considering the
realignment of resources to improve efficiencies
and eliminate duplication.
• Regular operations updates from the COO.
• Periodic updates regarding the development of
the procurement function, responsible supply
chain practices and commercial developments
with B2B licensees and third parties.
• Updates on cybersecurity and data protection.
• Briefings on any major incidents and remedial
actions from functional heads.
• Updates on risk review from Internal Audit and
Internal Controls functions.
• Direct participation with regulators at
tradeshows, regulatory meetings and regulator
roundtable events.
• Direct engagement by participating in the
Stakeholder Advisory Panel to inform and
challenge our thinking on sustainability matters.
• Direct engagement in the licensing and
• Engagement and endorsement of
management’s recommendation and
setting targets for SBTi and net zero and
near-term targets.
suitability process in several jurisdictions.
• Participating in training and update briefings
including on proposed governance and
audit reforms.
•
Indirect engagement considering developments
on wider social responsibility issues and
expectations and evolving macroeconomic,
industry, political, regulatory and
compliance developments.
• Regular updates on progress against the ESG
strategy, policy and implementation.
• Chief Sustainability and Public Policy Officer is
a standing attendee at Board meetings.
• Deep-dive sessions on Safer Gambling and
People and Talent.
• Receives regular updates from the Board on
licensing, regulation, policy and compliance
matters and data protection.
• The Chief Compliance Officer is a standing
attendee at Board meetings.
• The Risk and Compliance Committee is kept
informed of any changes to the regulatory
position in any significant jurisdiction where the
Group, through its licensees, may be exposed
and updated on progress in relation to agreed
action items on a regular basis.
• Updates from the Director of Internal Controls
and Company Secretary on proposed reforms to
the Code and audit requirements.
• The Board reviewed and approved policies and
updates to them, for the Environment, Modern
Slavery Statement, Human Rights, Safer
Gambling, Responsible Marketing, Anti- facilitation
of Tax Evasion; Anti-Money Laundering, Anti-bribery
and Corruption, and Supplier Code of Conduct.
• The Board received a presentation on safer
gambling, progress and use of AI technology.
26regulatory announcements in 2023
Regulatory announcements inform the market of corporate actions, important customer
contracts, financial results, the results of the Annual General Meeting, and General Meetings
and Board changes. Copies of these announcements, together with other IR information and
documents, are available on the Group website, www.playtech.com.
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Engaging with our colleagues
Latvia site visit
In June 2023, our Board travelled to Riga, Latvia, which
is home to our largest Live facility. The Board spent
two days in the Latvia facility, where it met with local
management and employees to gain insight into the day-
to-day operations and culture of the business.
Hosted by the Live management team, the Board
received presentations from the Live management
team on strategy, operational updates, innovations
and the latest developments in technology for the Live
vertical. The Board also presented the Group strategy for
Playtech, its priorities, the importance of the Live vertical
and future expectations.
The Board facilitated engagement sessions with groups
of employees from Latvia, as well as representatives from
other Live facilities. The employees provided background
to their roles at Playtech and discussed various matters,
from technology advancements and environmental factors
for new studios to emerging risks and growth opportunities.
The Board toured the Live facility and learnt about the
cutting-edge technology and development of the latest
game show releases. Joining in the Live Academy
training, the Board had an opportunity to participate in the
training for local dealers and learn about the development
of employees and the local operations.
During my visit to Latvia, I was inspired
to see how our colleagues in Live are
helping us to deliver on the Group’s
strategic priorities, create inspiring and
innovative experiences, and embed
sustainability as a core part of the
operations and ethos of the business.
Linda Marston-Weston
Chair of the Sustainability and Public Policy Committee
120 Playtech plc Annual Report and Financial Statements 2023
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Induction, training and succession planning
Induction
Newly appointed Directors receive a detailed and systematic
induction on joining the Board, which is guided by the Chairman
and supported by the Company Secretary.
The induction process is tailored to meet the skills and experience of
the Director, as well as their interests in specific topics and Committee
roles. Background information on the Company is provided, including
discussions on the strategy, purpose, values and culture, and recent
operational performance. Board policies and procedures are
covered, and training is provided on Directors’ duties, governance
and regulatory requirements, as well as their responsibilities under
the Market Abuse Regulation. Any specific training which is tailored
to meet the Director’s needs or fulfil Committee responsibilities is
arranged as necessary.
Joining Playtech, I welcomed the
opportunity to meet the management
team and appreciated the time taken
walking me through the Company’s
vision and strategy. The induction
gave me valuable insights into
the Company’s opportunities
and challenges and how the
Board addresses them,
making it easier for me to
utilise my experience and
to contribute effectively.”
Samy Reeb
Non-executive Director
Directors meet various members of Executive Management and
senior management, as well as the other Non-executive Directors.
New Directors receive briefing sessions to familiarise themselves with
all core aspects of the Group’s business, including operations, investor
relations, regulation and compliance and sustainability. On request,
meetings can be arranged with major shareholders, external advisers
or other stakeholders.
Upon joining Committees, Directors are provided with sufficient
background materials and sessions to understand the Committee’s
objectives and its recent activities.
Non-executive Director induction
Samy Reeb was appointed to the Board in January 2023. As part of
the appointment process, Samy had the opportunity to meet some
other Directors and Executive Management before joining the
Board to get to know them.
Samy’s induction started with the Company Secretary, who
covered Board procedures, historical and Company information
and regulatory requirements and facilitated induction training.
Samy had sessions with the Chairman and fellow Non-executive
Directors on strategy, values and purpose, as well as recent
activities and strategic and operational developments, in addition to
several in-depth sessions with management team members.
Samy was invited to attend the ICE exhibition in his second
month, where he met many of the colleagues of Playtech and
some of the Company’s stakeholders. Samy joined the Board on
a tour of Playtech’s exhibition where Playtech’s product teams
demonstrated the latest innovations.
Ongoing training
The Board receives annual training on core compliance topics and
developments in governance, internal controls and sustainability,
which independent advisers facilitate. Directors can receive tailored
additional training, based on their specific experience and needs, to
help them fulfil their roles on the Board and its Committees. During
the year, members of senior management are invited to attend
Board meetings occasionally to present on specific areas of the
Group’s business.
Succession planning
The Board is responsible for succession planning; however, the
Nominations Committee advises the Board on its succession planning
and leads the process for Director appointments in accordance
with appropriate succession plans. Board composition, succession
planning and talent development are considered annually.
The Nominations Committee meets on an as-needed basis. One
formal meeting was held in 2023. One topic discussed was the
consideration of candidates for appointment as a Non-executive
Director. This led to the appointment of Ruby Yam, effective
June 2023.
In November 2022, we reported the appointment of Chris McGinnis as
CFO. The CFO Report on pages 88 to 94 details the progress of this
transition during 2023.
The Nominations Committee monitors the composition and balance
of the Board and its Committees, identifying and recommending to the
Board the appointment of new Directors and/or Committee members.
The Nominations Committee believes that appointments should be
based on merit, compared against objective criteria, to ensure the
Board has the right skills, knowledge and experience to properly
discharge its current and future responsibilities. As set out in our Board
Diversity Policy, the Nominations Committee has committed to:
• reviewing Board composition, succession planning, talent
development and the broader aspects of diversity on an
annual basis;
• engaging with executive search firms committed to Playtech’s
approach to diversity, ensuring in every engagement that diversity
is a core part of the engagement process with these firms and
that the advisers share our values and approach in identifying and
proposing a diverse slate of suitable candidates for appointment to
the Board; and
•
identifying suitable candidates for appointment to the Board based
on merit against an objective criterion regarding the benefits of
diversity in promoting success for the benefit of all stakeholders
as well as the skills, experience, background, independence and
expertise of current members of the Board.
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Induction, training and succession planning continued
Evaluation
Frequency and review type
Year 1:
External
Year 2:
Internal
Year 3:
Internal
The Board is committed to an ongoing formal and rigorous evaluation
process for itself and its Committees to assess their performance
and identify areas in which their effectiveness, policies and processes
might be enhanced. The Board operates a three-year evaluation
cycle, in line with the Code provisions.
External evaluation – progress
Starting in 2022 and continuing throughout 2023, Independent Audit
Limited carried out the external evaluation. The approach included
detailed questionnaires, individual interviews with Directors and
members of senior management and attendance at Board and
Committee meetings. The review noted the improvement in Board
governance following a period of transformation under the leadership
of the Chairman, Brian Mattingley. The Board had made good
progress in achieving its primary objective of ensuring the long-term
health of the business in the interests of all shareholders, ensuring that
Playtech has a clear strategic direction. The evaluation highlighted the
active participation in Board discussions and positive attitude towards
governance from the Executive Team. Certain areas for improvement
were identified, which are set out in the table below with details of the
actions taken and progress made during 2023. In Q4 2023 a further
review facilitated by Independent Audit commenced and findings will
be presented to the Board in H1 2024.
Opportunities or focus area
Actions and progress made
Improvement in internal governance,
processes and controls
• Financial controls improvement programme has continued into its second year. Read more in
the Audit Committee Report on page 124.
• A new Director of Internal Controls and Risk Management was appointed in 2023, and a wider
internal controls programme was scoped and established in 2023.
• An Internal Governance and Controls Steering Committee was introduced.
Enhancing visibility of the assessment and
evaluation of investment opportunities
• Comprehensive reports with defined, consistent criteria are presented for all
investment opportunities.
• Expert advisers were invited to present to the Board on various aspects of certain investment
opportunities.
• A deep-dive session was held on structured agreements.
• An Internal Controls and Risk function was established and risk and internal controls
assurance map has been developed and presented to the Board.
Refinement of focus of Internal
Audit and Risk Management
• The focus of the Internal Audit function was refined in 2023 and an Internal Audit Effectiveness
review was carried out.
•
Internal Audit has separated from Risk Management, with Risk Management being
transferred to the Internal Controls function.
•
Implementation of a new risk management framework driven by the Risk Committee.
Internal evaluation
Individual evaluation
In late 2023, an internal evaluation was carried out. The diagram below
denotes the process of evaluation.
• Format of the evaluation was agreed by the Chairman
and Senior Independent Director with the guidance of the
Company Secretary.
• The Chairman, SID or Company Secretary, as appropriate,
interviewed each of the Directors.
• Progress on the findings of the evaluation will be monitored
by the Company Secretary.
Executive Directors are evaluated each year on individual
performance against their performance criteria set by the Board,
which are linked to the strategic and financial performance of
the Company.
Non-executive Directors’ contributions are assessed by the
Chairman, Brian Mattingley, with the support of the Senior
Independent Director, Ian Penrose. The Chairman confirms that
each Director continues to make a significant contribution to the
Board and the Group’s business and is able to allocate sufficient
time commitment.
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, purpose and values and ensuring the structures, capabilities
and reporting are in place to achieve the Board’s goals.
The Senior Independent Director, Ian Penrose, conducts a review
of the Chairman’s performance, taking into account the views of the
Non-executive Directors.
122 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Summary
An internal team consisting of members drawn from Investor Relations, Group Secretariat and Group Finance have led the process on this
Annual Report, including 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 2023 is 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
26 March 2024
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Audit Committee Report
Maintaining oversight
and accountability
Dear Shareholder
Introduction
As Chair of the Audit Committee, I am pleased
to introduce my first report for the year ended
31 December 2023, 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.
I was appointed as Chair of the Audit
Committee in September 2023, having
been a member of the Committee since
September 2018. I would like to thank
John Krumins as the previous Committee
Chair for his diligent leadership since
September 2021. In advance of taking over
as Chair, I completed a thorough handover
which included meetings with John and other
key stakeholders, including the Group CEO,
the Group CFO, members of the Executive
Management team, the finance, tax and
internal control management teams and the
internal and external audit teams. In addition,
I met with Committee members to discuss the
areas of improvement and where additional
focus was required.
The Committee has spent a considerable
amount of time focused on the Group’s
financial controls and risks, as well as
the impending requirements due to the
changes to the Corporate Governance
Code. Furthermore, as a result of the legal
dispute with Caliplay, since autumn 2023,
the Committee has increased the number of
times it has met (at least monthly) to assess,
with the executive, legal and internal audit
teams, together with BDO, the external
auditor, Bryan Cave Leighton Paisner
LLP (BCLP), the Group’s legal advisers,
and our co-sourced internal auditor, PwC,
the continued accounting treatment and
governance of the numerous accounting
matters affected by the dispute. I would
like to thank the Committee members, the
Board and the executive team, together with
the audit, legal and financial/governance
advisers, who have worked diligently
throughout this process.
Responsibilities
The Board is required by the UK Corporate
Governance Code 2018 (the “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.
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; monitoring 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;
• 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;
Ian Penrose
Chair of the
Audit Committee
The Committee has spent
a considerable amount of
time focusing on the Group’s
financial controls and risks,
as well as the impending
requirements due to the
changes to the Corporate
Governance Code.”
124 Playtech plc Annual Report and Financial Statements 2023
Governance Report
• 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;
• monitoring and approving the scope and costs of audit;
• 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; and
• working closely with the Sustainability and Public Policy Committee
to oversee governance over environmental, social and governance
(ESG) considerations, and continued effectiveness of the ESG
strategy and its implementation.
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
As at 31 December 2023, the Audit Committee comprises three
independent Non-executive Directors. Ian Penrose was appointed
as the Chair of the Audit Committee on 29 September 2023 having
been a member of the Committee since 1 September 2018. Ian has
considerable experience as a CEO, CFO and Non-executive Director
across the gaming, leisure and technology sectors. The Board
considers he has recent and relevant financial experience (he is also
a Chartered Accountant, having qualified with Ernst & Young – now
EY) in order to chair the Audit Committee. In addition to Ian Penrose,
the other members are: 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; and Samy Reeb, who commenced 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. The range
and depth of their financial and commercial experience enable 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.
John Krumins was the Chair of the Audit Committee in the year until
29 September 2023, when he stepped down from the Board and his
position as Chair of the Audit Committee following a smooth transition
to Ian Penrose.
The Chair of the Audit Committee, Ian Penrose, was a member
of the Committee prior to his appointment as Chair. Prior to this
appointment, and in order to ensure a smooth transition into the role,
Ian held a number of meetings with the Board, Committee members,
the executive team and the external auditor to reassess matters
relating to financial reporting, risk management and internal control,
internal audit process and external audit process.
The Company Chairman, CEO, CFO, Director of Internal Audit,
Director of Risk, Internal Control and Assurance, BDO and the
Group’s legal advisers, BCLP, attended meetings of the Audit
Committee by invitation. The Vice President of Finance and the
Corporate Finance Director were also invited to attend the meetings
of the Committee that considered the year-end and interim financial
statements. Finally, 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 a
year without any Executive Directors being present in order to receive
feedback from them on matters such as the quality of interaction with
management. The Chair also met or interacted with BDO on at least a
monthly basis to discuss matters either involving the audit process or
of general relevance to the Group.
Meetings of the Committee
The Committee met eight times during 2023 and, as noted earlier,
have met a further five times in 2024 ahead of the conclusion of
the 2023 Annual Report and Accounts. Furthermore, the three
Committee members have held several meetings/Zoom calls to
informally discuss the issues affecting the financial statements.
The matters that were broadly considered by the Committee during
the year included:
• review of the ongoing Caliplay dispute and impact on the financial
statements of the Group for the year ended 31 December 2023;
• review of current and anticipated requirements for the Group’s
financial control systems;
• maturity assessment of the Group’s control environment,
including the review of third-party assessments and associated
enhancement projects;
• the scope and effectiveness of the Group’s system of internal
controls and risk management;
• review of cybersecurity strategy, risks and system resilience;
• review of the structure and governance systems for investment
in associates;
• review of Group treasury;
• the Group’s strategy for managing tax risk;
• review of disclosure requirements, with specific focus on both
Group revenue streams and related party considerations across
the Group;
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125
Governance Report
Audit Committee Report continued
Meetings of the Committee continued
• valuation of derivative financial assets held in LATAM operations;
Key estimates, judgements and financial
reporting standards
• provisioning requirements and policies;
• data management and billing resilience;
• Board delegated authorities; and
• non-financial information updates:
• synergies with Sustainability and Public Policy and Risk and
Compliance Committees; and
• review of ESG assurance metrics.
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;
• consider results of internal audit reviews, management action plans
to resolve any issues arising and the tracking of their resolution; and
• 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 the auditor when the Group moved to a premium listing and
have remained as auditor since. This is Oliver Chinneck’s fourth year
as lead audit partner. BDO’s 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 the 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.
Following the publication by the FRC of the Audit Committees and
the External Audit: Minimum Standard, the Audit Committee will
be ready to demonstrate compliance with what will be mandatory
requirements, noting that currently best practice guidance is
being applied.
Impact of Caliplay dispute
The Committee directed work this year to ensure that robust
evidence was gathered to enable the Directors to make their
significant judgement over revenue recognition and recoverability of
outstanding debt, following the ongoing Caliplay dispute. The dispute
and the significant judgements made are further explained in Note 7
of the financial statements, and involved additional Audit Committee
meetings in late 2023 and early 2024 to understand the progress
of the dispute and obtain advice from external legal and accounting
experts in relation to the significant judgement made and the
conclusions reached. The Committee also ensured that sufficient
disclosures were included in Note 7 and the rest of the Annual Report,
capturing all other financial statement areas which the dispute has
had an impact on as at 31 December 2023 (for example the valuation
of the Playtech M&A Call Option) or could potentially be impacted
going forward depending on the outcome of the dispute (for example
the CGU impairment review and assessment of recoverability of the
Group’s deferred tax asset).
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 predominantly a revenue share model which is based on software
fees earned from B2C business partners’ revenue. The Committee
concluded that the Group’s revenue recognition policy relating to
these types of contracts is in line with IFRS requirements.
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 considered factors such as higher inflation and the
ongoing Caliplay dispute.
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, which
reported its findings to the Committee. The Committee satisfied
itself that the conclusions made on the impairments of the Sports
B2B, Eyecon and Quickspin 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.
126 Playtech plc Annual Report and Financial Statements 2023
Governance Report
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 7 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 satisfied that each
classification, which is further explained and disclosed in Note 21
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 Playtech M&A Call Option, who were guided by
management in terms of judgements made, with the rest of the
valuations being completed in house by the Playtech finance team.
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 the judgement made in relation to the Caliplay dispute and the
impact this judgement has on the valuation of the Playtech M&A Call
Option as further explained in Notes 7, 21A and 21C.
Other financial statement areas
The Audit Committee also 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:
• reasonableness of discounts and concessions applied in
recognising revenue from various licensees (in the form of
marketing contributions or discounts to revenues earned);
• accounting and fair value assessment of the Group’s investment
in Hard Rock Digital as at 31 December 2023;
• recoverability assessment of trade and other receivables as at
31 December 2023;
•
impairment review of investments held by Playtech plc in other
Group companies, and in particular the investment in Playtech
Software Limited; and
• recoverability assessment of the Group’s deferred tax assets in
relation to UK tax losses.
Finally, the Audit Committee assessed the adjusted performance
measures as further explained in Note 6U and adjusting items in
Note 11 with reference to European Securities and Markets Authority
(ESMA) guidelines and is satisfied that these are reasonable and
appropriately disclosed.
Viability and going concern statements
The Committee reviewed management’s work on assessing risks
and potential risks to the Company’s business for both the going
concern and viability statement periods, which included challenging
the approach taken by management to support the going concern
statement on page 147 and viability statement set out on pages 101
and 102 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 and the payment for the renewal of the
Italian gaming licences. Furthermore, the Committee reviewed the
assumptions made in both the base case and stress test scenarios
in relation to the Caliplay dispute and in particular the outcome of
the statements made in the stress test scenario which included the
remote scenario that no further cash is received by the Group from
Caliplay. 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
As noted in the 2022 Audit Committee Report the FRC commenced
a review into the 2021 audit completed by BDO. The review was
ongoing at the conclusion of the 2022 Annual Report but was
concluded in the current year.
BDO kept the Committee updated with the progress of the review
findings and addressed certain initial matters arising during the 2022
year-end audit. The Committee was satisfied with the final outcome of
the review which concluded the audit required limited improvements.
The FRC identified certain areas of limited significance that required
improvement and the Committee received an update from BDO as to
how these were addressed in the 2023 audit. As part of the process
the Chair met with the FRC team both at the start and conclusion of
the review.
Independence and non-audit services
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 it is
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 is included in Note 12
to the financial statements on page 193.
The Committee remains satisfied with the manner, robustness and
level of challenge of BDO’s audit processes and believe BDO should
remain as auditor for 2024. The reappointment will be formally
considered at the Annual General Meeting.
Playtech plc Annual Report and Financial Statements 2023
127
Governance Report
Audit Committee Report continued
Internal Audit
Internal control
The Company has an Internal Audit function where the Director of
Internal Audit reports directly to the Chair of the Audit Committee
and has direct access to all executives.
The key objective of the Internal Audit function is to provide the Board,
the Audit 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.
The scope of work of the Internal Audit function includes all
processes, systems and activities of the Group. During the year, the
Internal Audit team performed a number of audits over both individual
entities and central functions across the Group which aimed to
provide assurance across key risks and processes in the business.
The results of Internal Audit activities are reported to the Audit
Committee on a regular basis, with recommendations made by
the Internal Audit function and corresponding management actions
being reviewed and challenged, where appropriate. In addition to
regular feedback of audit results, the Internal Audit function monitors
completion of management actions and provides updates of these
to the Audit Committee.
An internal audit plan detailing activities for 2024 was developed by
the Internal Audit function and was challenged and approved by the
Audit Committee at the November 2023 Audit Committee meeting.
The Internal Audit function will carry out engagements 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 Internal Audit function continually assesses the
plan and the Audit Committee believes this assessment will ensure
the internal audit plan remains fit for purpose and relevant in light of
any new or emerging risks. The Internal Audit function is also utilised
to provide assurance over corporate governance matters and for ad
hoc projects, where necessary.
The Audit Committee confirms that any necessary action will be taken
to remedy any significant failings or weaknesses identified from any
Internal Audit reviews.
The Audit Committee reviews the quality and effectiveness of the
Internal Audit function annually which also includes an assessment
of the independence and objectivity of the team.
A particular focus of the Audit Committee in 2023 was to continue
its oversight of the high-profile enhancement of the Group financial
controls through the Financial Control Improvement Programme.
This follows the detailed review and re-set of the Group’s internal
control regime in light of good business practice and impending
change to UK Corporate Governance legislation. This has been
complemented by the establishment of a new Risk, Internal Control
and Assurance function headed by an experienced Director.
This function supports the Audit Committee’s development of the
Group’s broader risk and internal control strategy, given the evolving
nature of our strategic priorities, regulatory environments within
which the Group operates and stakeholder interests.
In parallel to the review of the financial control improvement regime,
the Audit Committee considered the Group’s broader control
framework 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, IT and data security.
Looking ahead, the Committee acknowledges 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 on enhanced financial and
non-financial controls, including establishing oversight of ESG,
CSR, fraud management and broader security and audit regimes.
To this end, during 2024, the Committee shall undertake a regular
rhythm of review of the wider Internal Control Programme, along with
associated roadmaps and actions relating to our readiness position
for UK Corporate Governance changes. Following a consultation on
the UK Corporate Governance Code (the “Code”), the FRC published
a revised Code which will apply to financial years beginning on or
after 1 January 2025 save for new Provision 29 (board declaration
on effectiveness of its material internal controls), which will apply
to financial years beginning on or after 1 January 2026. The 2024
changes to the Code are aimed at enhancing transparency and
accountability of UK companies, taking a targeted, proportionate
approach which focuses on a small number of changes to ensure
the right balance is struck between UK competitiveness and positive
outcomes for companies, investors and the wider public.
During the latter half of 2022 and throughout 2023 a review of the
Committee’s effectiveness was carried out as part of an external
evaluation. The evaluation was carried out by Independent Audit
Limited. A further facilitated review commenced towards the end
of 2023 and it is intended that this review will be discussed by the
full Board in H1 2024.
I believe the skills and experience of the Committee members remain
strong and relevant, enabling the Audit Committee to continue to
perform effectively.
Ian Penrose
Chair of the Audit Committee
26 March 2024
128 Playtech plc Annual Report and Financial Statements 2023
Remuneration report
Remuneration Report
Statement by the Committee Chair
Restructured remuneration aligns
with performance
Performance and pay
outcome for 2023
Annual bonus
The 2023 annual bonus outcome for
the CEO and CFO is 95% and 100% of
maximum, corresponding to 190% and 150%
of salary, which results in a total payment
of £1,603,600 and £600,000. 50% of
these amounts (£801,800 and £300,000)
will be paid once the 2023 Annual Report
and Accounts has been signed off, a third
of which (£267,267 and £100,000) will be
used to purchase shares in the market at
this time, which will be subject to recovery
for two years. Despite excellent financial
performance, the Remuneration Committee
recognises that the ongoing dispute with
our largest customer, Caliplay, has weighed
on shareholder sentiment and Playtech’s
stock price performance. The Board and
management are in ongoing discussions
with Caliplay but there can be no certainty
on what any outcome might be. The Board
is confident that the outstanding funds will
be recovered. In light of the dispute, the
Remuneration Committee has decided to
exercise its discretion to defer settlement
of the remaining 50% of the annual bonus
amounts pending resolution on the ongoing
litigation with Caliplay.
LTIPs
As disclosed in last year’s report, the
estimated vesting outcome of the 2020
LTIP as at 31 December 2022 was 60.85%
based on the final EPS outcome (93.4%
of maximum) and estimated relative TSR
outcomes (50% of maximum). Following
the end of the TSR performance period on
25 October 2023, the final vesting outcome
under the 2020 LTIP award was 74.21%.
The awards are also subject to a two-year
retention period post vesting. No discretion
was exercised in determining the LTIP
outcome for 2022.
No LTIP award was granted in 2021 due
to the Company being in a closed period
for most of 2021 so there was no vesting in
respect of any LTIP awards this year.
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 2023. This is my
first Directors’ Remuneration Report (the
“Report”) as Chair of the Remuneration
Committee (the “Committee”), and I would
like to thank my colleague Ian Penrose for
his stewardship of the Committee since
November 2018.
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)
the new Directors’ Remuneration Policy
(the “Policy”), subject to approval by
shareholders at the 2024 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 2023. The Annual Report on
Remuneration and this Statement will be the
subject of an advisory shareholder resolution
at the forthcoming AGM.
Business context
Playtech performed very strongly over the
year and delivered Adjusted EBITDA up
9% to €432 million, ahead of previously
raised expectations and Company budget.
As well as delivering excellent financial
results, the Group made important strategic
and operational progress, including our
expansion across the US, opening a third
Live Casino facility in Pennsylvania and
taking the number of licences granted to
11 with further applications pending. Our
B2C division delivered revenues exceeding
€1 billion for the first time, and Snaitech
remains well positioned to benefit from the
underpenetration of the online segment
in Italy, given the strength of the brand,
the continuous improvements to apps
and technology, and a broadening of its
content offering.
Playtech plc Annual Report and Financial Statements 2023
129
Anna Massion
Chair of the Remuneration Committee
The Committee continues
to work hard to improve
corporate governance and
strengthen the pay-for-
performance culture in
the business.”
LTIP award
It is the intention of the Company to grant LTIP awards to the
Executive Directors, senior management and staff in respect of
2024 as soon as practicable following the publication of the 2023
annual Results.
Pension
Executive Director pension contributions are now aligned with the
wider workforce contribution of 7.5% of salary from 1 January 2023.
Review of wider workforce remuneration
The Committee (along with the support of the Executive Directors)
commissioned a review of long-term incentive plan participation
for Playtech employees during the year in order to ensure that the
existing scheme remained appropriate. The review identified that for
less senior employees the LTIP scheme was too complex and was not
driving retention due to a lack of direct line of sight and influence over
the performance conditions.
As such, it was determined that for a significant majority of below-
Board participants the existing LTIP scheme would be replaced with
a Restricted Share Plan (RSP) to ensure that the long-term incentive
is easier to understand and therefore highly valued by participants.
The existing LTIP scheme would remain in place for those key
strategic leaders below-Board level to maintain a performance-based
culture, with a clear link between the delivery of shareholder value
and employee incentives.
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 2024 AGM.
Anna Massion
Chair of the Remuneration Committee
26 March 2024
Remuneration Report
Statement by the Committee Chair continued
New Directors’ Remuneration Policy and how we will
operate it in 2024
Review of Directors’ Remuneration Policy
In line with corporate governance requirements, our Remuneration
Policy is reviewed every three years and approved by shareholders.
As such, during 2023 the Committee undertook a review of the
Remuneration Policy to ensure it aligns to Playtech’s purpose and
strategic priorities, and supports our continued success. The review
took into account UK listed market practice, corporate governance
developments since the approval of our current Remuneration Policy
in 2021 and remuneration benchmarking of the senior team including
the Executive Directors.
The findings of the review were that the Remuneration Policy
remained fit for purpose and has maintained a strong alignment
between pay and performance over recent years. Therefore the
Committee is proposing to put forward an unchanged Remuneration
Policy for approval by shareholders at the 2024 AGM, save for a
change to the normal LTIP grant for the CFO.
The Committee is proposing to increase the normal LTIP grant for
the CFO to 200% of salary, aligned with the normal maximum grant
awarded to the CEO and below the maximum award under the current
Remuneration Policy of 250% of salary. Recognising his recent
performance in role following his appointment as CFO and to the
Board on 28 November 2022, the Committee feels it is appropriate to
increase his LTIP opportunity to 200% in order to provide equal equity
upside for both Executive Directors. The proposals also support a
rebalancing of performance-based pay to ensure that the CFO’s
remuneration package is more heavily weighted to drive performance
and alignment with shareholders over the longer term.
Base salary
The average salary increase for 2024 awarded to those employees
across the UK workforce who were eligible to receive a salary
increase was 1.4%. As set out in last year’s report, the CFO’s salary
increased to £400,000 on 1 July 2023, and will not be increased
until the next review on 1 January 2025. The Committee reviewed
the CEO’s salary and determined that there would be no increase
effective 1 January 2024.
Annual bonus
The annual bonus opportunity for 2024 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. As in previous years, the Adjusted
EBITDA and cash flow targets have been set above City consensus
in line with the Company’s internal business plan. The remaining 30%
of the bonus will be based on key strategic targets which will again
include ESG measures. The CEO’s strategic targets for 2024 will be
based on the Company’s strategy and to build on the progress made
in 2023. The CFO’s strategic targets for 2024, as they were in 2023,
will be focused on continuing to build a leading finance organisation
and supporting structure as well as ensuring the Group continues to
operate in as efficient a manner as possible.
In line with the Directors’ Remuneration Policy, 33.3% of any annual
bonus payment will be deferred into shares for two years.
130 Playtech plc Annual Report and Financial Statements 2023
Remuneration Report
Directors’ Remuneration Policy
For approval at 2024 AGM
As set out in the Chair’s statement, the Committee reviewed the
current Directors’ Remuneration Policy during the year to ensure
it remained fit for purpose. The Committee determined that the
Remuneration Policy continues to be appropriate for Playtech
and therefore is proposing to put forward a largely unchanged
Remuneration Policy which is intended to apply for three years from
the date of the 2024 AGM, subject to shareholder approval.
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
including the individual elements of remuneration and their operation.
Remuneration philosophy
Our 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.
Proposed changes to the Directors’ Remuneration
Policy and associated rationale
The Committee is proposing to increase the normal LTIP grant for
the CFO to 200% of salary, aligned with the normal maximum grant
awarded to the CEO and below the maximum award under the current
Remuneration Policy of 250% of salary. Recognising his recent
performance in role following his appointment as CFO and to the
Board on 28 November 2022, the Committee feel it is appropriate to
increase his LTIP opportunity to 200% in order to provide equal equity
upside for both Executive Directors. The proposals also support a
rebalancing of performance-based pay to ensure that the CFO’s
remuneration package is more heavily weighted to drive performance
and alignment with shareholders over the longer term.
• 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 discretion.
Remuneration Policy for Executive Directors
The following table summarises each element of remuneration and how it supports the Company’s short and long-term strategic objectives.
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 2023
131
Remuneration Report
Directors’ Remuneration Policy continued
For approval at 2024 AGM
Remuneration Policy for Executive Directors continued
Element of
remuneration
Short-term and long-term
strategic objectives
Operation
Benefits
To help attract and retain
high calibre individuals.
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.
Annual bonus Clear and direct
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.
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% of salary in
performance shares for the
CEO and other Executive
Directors.
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.
Pension
Provide
retirement benefits.
Provision of cash allowance.
Pension for 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.
132 Playtech plc Annual Report and Financial Statements 2023
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.
N/A
Remuneration Report
Element of
remuneration
Short-term and long-term
strategic objectives
Operation
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.
Opportunity
N/A
Framework to assess
performance
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.
Explanation of chosen performance measures and target setting
Performance measures will be selected to reflect the key performance indicators which are critical to the realisation of our business strategy and
delivery of shareholder returns. The performance targets are reviewed each year to ensure that they are sufficiently challenging. When setting
these targets the Committee will take into account a number of different reference points including, for financial targets, the Company’s business
plan and consensus analyst forecasts of the Company’s performance. Full vesting will only occur for what the Remuneration Committee
considers to be excellent performance.
Remuneration scenarios for Executive Directors at different levels of performance
The graphs below illustrate how the total pay opportunities for the Executive Directors for 2024 vary under three performance scenarios:
minimum, on target and maximum.
Chief Executive Officer
£4,320
39%
£5,164
16%
33%
Chief Financial Officer
£2,033
39%
£2,433
16%
33%
£2,716
34%
31%
35%
£944
100%
39%
33%
22%
18%
£1,273
35%
31%
34%
£433
100%
39%
33%
22%
18%
Threshold
On target
Maximum
Maximum
with 50% SP
appreciation
Threshold
On target
Maximum
Maximum
with 50% SP
appreciation
Fixed pay
Annual bonus
LTIP
LTIP with 50% share price appreciation
1 The value of benefits are in line with the values paid during 2023 as stated in the single figure table.
2
Assumptions when compiling the charts are: threshold = fixed pay only (base salary, benefits and pension), target = fixed pay plus 50% of annual bonus payable and 55% of LTIP vesting and
maximum = fixed pay plus 100% of annual bonus payable and 100% of LTIP vesting.
3 Share price appreciation has been taken into account for the maximum column on the basis of a 50% increase in the share price across the performance period.
Playtech plc Annual Report and Financial Statements 2023
133
Remuneration Report
Directors’ Remuneration Policy continued
For approval at 2024 AGM
Policy on recruitment or promotion of
Executive Directors
Base salary levels will be set to reflect the experience of the individual,
appropriate market data and internal relativities. The Remuneration
Committee may feel it is appropriate to appoint a new Director on
a below market salary with a view to making above market and
workforce annual increases on a phased basis to reach the desired
salary positioning, subject to individual and Company performance.
Normal policy will be for the new Director to participate in the
remuneration structure detailed above, including the maximum
incentive levels for the Chief Executive Officer and Chief Financial
Officer. The pension contribution will be aligned to the contribution
received by the majority of the workforce in the jurisdiction in which
the Director is based. Depending on the timing of the appointment, the
Remuneration Committee may decide to set different annual bonus
performance conditions for the first performance year of appointment
from those stated in the Policy above. The Committee may also
provide relocation expenses/arrangements, legal fees and costs.
The variable pay elements that may be offered will be subject to
the maximum limits stated in the Policy table. The Remuneration
Committee may consider it necessary and in the best interests of the
Company and its shareholders to offer additional cash and/or make a
grant of shares in order to compensate the individual for remuneration
that would be forfeited from the current employer. Such awards would
be structured to mirror the value, form and structure of the forfeited
awards or to provide alignment with existing shareholders.
In the case of an internal promotion, any commitments entered
into prior to the promotion shall continue to apply. Any variable pay
elements shall be entitled to pay out according to its original terms
on grant. For the appointment of a new Chairman or Non-executive
Director, the fee arrangement would be set in accordance with the
approved Remuneration Policy in force at that time.
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 garden 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
Change of control
Notice period
Termination payment
Salary, bonus, LTIP, benefits and pension
entitlements in line with the with the Directors’
Remuneration Policy table on page 131
No special contractual provisions apply in the
event of a change of control
12 months’ notice from Company or employee
for the CEO and 12 months’ notice for 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
Restrictive covenants
During employment and for 12 months thereafter
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.
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.
Term
Termination
Name
Brian Mattingley
Date
1 June 2021
Ian Penrose
1 September 2018
Anna Massion
2 April 2019
Linda Marston-Weston
1 October 2021
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
Six months’ notice on either side or if not re-elected,
disqualification or commits gross misconduct
90 days’ notice on either side or if not re-elected,
disqualification or commits gross misconduct
134 Playtech plc Annual Report and Financial Statements 2023
Remuneration Report
Consideration of employment conditions elsewhere
in the Company when setting Directors’ pay continued
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 and 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.
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 2023 AGM, particularly as a consequence of the corporate
activity. Shareholders provided valuable input into the Company’s
Remuneration Policy.
Legacy arrangements
In approving the Remuneration Policy, authority is given to the
Company to honour any commitments previously entered into
with current or former Directors that have been disclosed previously
to shareholders.
Discretion vested in the Remuneration Committee
The Remuneration Committee will operate the annual bonus and
LTIP according to their respective rules (or relevant documents) and
in accordance with the Listing Rules where relevant. The Committee
retains discretion, consistent with market practice, in a number of
regards to the operation and administration of these plans. These
include, but are not limited to, the following in relation to the LTIP:
• the participants;
• the timing of grant of an award;
• the size of an award;
• the determination of vesting;
• discretion required when dealing with a change of control or
restructuring of the Group;
• determination of the treatment of leavers based on the rules of the
plan and the appropriate treatment chosen;
• adjustments required in certain circumstances (e.g. rights issues,
corporate restructuring events and special dividends); and
• the annual review of performance measures and weighting, and
targets for the LTIP from year to year.
In relation to the annual bonus plan, the Remuneration Committee
retains discretion over:
• the participants;
• the timing of a payment;
• the determination of the amount of a bonus payment;
• the determination of the treatment of leavers; and
• the annual review of performance measures and weighting,
and targets for the annual bonus plan from year to year.
In relation to both the Company’s LTIP and annual bonus plan, the
Committee retains the ability to adjust the targets and/or set different
measures if events occur (e.g. material acquisition and/or divestment
of a Group business) which cause it to determine that the conditions
are no longer appropriate and the amendment is required so that the
conditions achieve their original purpose and are not materially less
difficult to satisfy. Given the unique, fast-changing and challenging
environment in which the Group operates, the Remuneration
Committee considers that it needs some discretion if, acting fairly and
reasonably, it feels that the payout is inconsistent with the Company’s
overall performance taking account of any factors it considers relevant.
Any use of the above discretions would, where relevant, be explained
in the Annual Report on Remuneration and may, as appropriate, be the
subject of consultation with the Company’s major shareholders.
External directorships
The Group allows Executive Directors to hold a non-executive position
with one other company, for which they can retain the fees earned.
Playtech plc Annual Report and Financial Statements 2023
135
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)
Executive Director
Salary1
Bonus2
Annual long-term incentive3,4
Benefits5
Pension
Total emoluments6
Total fixed pay6
Total variable pay6
Directors’ emoluments (restated in €) (audited)
Executive Director
Salary1
Bonus2
Annual long-term incentive3,4
Benefits5
Pension
Total emoluments6
Total fixed pay6
Total variable pay6
Mor Weizer
Chris McGinnis
2023
2022
2023
844,000
1,603,600
—
36,698
63,300
2,547,598
943,998
1,603,600
816,000
1,632,000
1,519,451
38,271
107,100
4,112,813
961,371
3,151,451
375,000
600,000
—
3,125
28,625
1,006,750
406,750
600,000
2022
33,205
—
227,918
260
2,490
263,873
35,956
227,918
Mor Weizer
Chris McGinnis
2023
2022
2023
2022
965,300
1,850,024
—
42,195
72,796
957,443
1,914,886
1,746,356
44,798
125,895
2,930,314
4,789,379
1,080,290
1,128,137
1,850,024
3,661,242
432,626
692,201
—
3,606
33,024
1,161,457
469,255
692,201
37,703
—
261,953
294
2,816
302,767
40,814
261,953
1
2
3
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. Chris McGinnis was appointed to the Board on 28 November 2022 on a base salary of £350,000 and therefore the amounts disclosed for 2022 are in respect of the period he served as
a Director. The Committee reviewed the Executive Directors’ salaries with effect from 1 January 2023. It was decided that Mor Weizer’s salary would be increased by 3.5%. As set out in last year’s
report, Chris McGinnis base salary was increased to £400,000 effective from 1 July 2023.
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 2022 and 31 December 2023 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 during 2022. At the time of
Chris McGinnis’ appointment as CFO in November 2022, and recognising that he was not to be entitled to a bonus for the period he served as a Director in 2022, it was agreed that, provided his
performance was to the level expected by the Board during his first year, the bonus for 2023 would be based on his salary for the second half of the year of £400,000.
The LTIP awards granted in October 2020 and vested in October 2023 were 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). As set out in last year’s report, the final vesting outcome under the EPS
condition was 93.4%. The final vesting outcome of the TSR conditions was 50.9%, and therefore the overall vesting outcome was 74.2%. This performance outcome corresponds to a total of 405,187
and 60,778 nil cost options vesting for Mor Weizer and Chris McGinnis respectively. The value included in the table for Mor and Chris is therefore £1,519,451 (€1,746,356) and £227,918 (€261,953),
based on the share price on 26 October 2023 of £3.75 (€4.31), of which £35,251 (€109,400) and £5,288 (€16,410) relate to share price appreciation respectively. Further details on the LTIP outcomes
for the 2020 awards are set out on page 138.
4 No LTIP award was granted in 2021 due to the Company being in a closed period for most of 2021.
5 Benefits include private medical insurance, permanent health insurance, car and life assurance.
6 The “Total fixed pay” and “Total variable pay” rows set out in the table may not appear to add up to the “Total emoluments” row due to rounding.
136 Playtech plc Annual Report and Financial Statements 2023
Remuneration Report
Playtech plc Annual Report and Financial Statements 2023
137
Non-executive Directors’ emoluments (in £) (audited)3,4FeesAnnual bonus2BenefitsPensionTotal emolumentsDirector2023202220232022202320222023202220232022Brian Mattingley350,000470,000——————350,000470,000Ian Penrose175,000262,000——————175,000262,000Anna Massion155,000252,000——————155,000252,000John Krumins1116,250252,000——————116,250252,000Linda Marston-Weston155,000252,000——————155,000252,000Samy Reeb1143,750———————143,750—Ruby Yam158,333———————58,333—Non-executive Directors’ emoluments (in €) (audited)2,3,4Fees are paid in Sterling and are translated into Euros in the table below:FeesTotal emolumentsDirector2023202220232022Brian Mattingley402,603545,963402,603545,963Ian Penrose201,275301,726201,275301,726Anna Massion178,288290,041178,288290,041John Krumins1133,664290,041133,664290,041Linda Marston-Weston178,276290,041178,276290,041Samy Reeb1165,482—165,482—Ruby Yam168,116—68,116—1 Samy Reeb joined the Board on 4 January 2023 and Ruby Yam joined on 1 June 2023. Ruby Yam then stepped down on 11 July 2023 due to personal family reasons. John Krumins also stepped down from the Board following publication of the Group’s interim results on 7 September 2023.2 Non-executive Directors are not eligible to receive any variable pay under the Remuneration Policy, nor do they receive any remuneration in respect of benefits or pension.3 The Chairman and Non-executive Directors received an increase effective from 1 January 2023. Further details of the fee levels are provided on page 139. 4 The Chairman and Non-executive Directors received additional fees in respect of the significant additional work performed in the year 2022, 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.Determination of 2023 bonus In accordance with the Company’s Remuneration Policy, the CEO and CFO had the opportunity to earn a bonus in respect of 2023 of 200% and 150% of salary respectively. 2023 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%€396m€420m€432m50%50%Cash flow (€’m)20%€325m€350m€365m20%20%Strategic and non-financial (30%)30%See below25%30%Total100%95%100%As set out in the 2022 Directors’ Remuneration Report, the financial performance targets were divided this year between Adjusted EBITDA and cash flow, with 50% and 20% weightings respectively. 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 2023, the Committee and Board took into consideration both consensus estimates and internal forecasts. The Adjusted EBITDA and cash flow targets were 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. During the year the targets were adjusted to reflect the reclassification of Snaitech online bank charges into EBITDA from financing costs, consistent with the definition of Adjusted EBITDA that the Company uses in its external reporting. The Committee was satisfied that the targets remained as stretching as originally intended. The cash flow target was achieved despite the year-end outstanding debtor balance from Caliplay as the Company exceeded its EBITDA target, kept a tight control on costs and practised prudent working capital management.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. ESG targets set for 2023 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% for Scope 1 and 2 emissions 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. Remuneration Report
Annual report on remuneration continued
Determination of 2023 bonus continued
The Group made good progress against many of the key strategic
and operational objectives set at the beginning of the year.
• Developing relationships with the Company’s shareholder base
(CEO: 5%) – met based on the relationships developed over the
year with many of the Company’s newer shareholders.
• Establishing partnership agreements in the US (CEO: 5%) – met
based on the progress the Company continued to make in the US
including the agreement signed with Hard Rock Digital.
• Leading the negotiation of the Caliente agreement (CEO:
5%) – not met given the ongoing litigation with Caliplay as at
31 December 2023.
• Delivering financial gains from driving efficiencies (CEO: 7.5%;
CFO: 10%) – met based on the significant cost efficiencies delivered
as part of the Company’s multi-year transformation programme
which helped drive the Company’s strong performance in the year.
• ESG (CEO: 7.5%; CFO: 10%) – met based on the significant
progress on the ESG objectives in the year (please see the
Sustainability Report for further details).
• Expansion of the treasury function and review of forecasting and
internal controls functions (CFO: 10%) – met on the basis of the strong
progress in the year including establishment of a Treasury function
(appointing a Group Treasurer, significantly reducing number of
bank accounts and deploying idle cash to generate finance income),
reorganising the financial control function, establishing a three-year
planning process, and appointing a Director of Internal Controls.
The financial performance of Playtech was strong in 2023 with
performance exceeding the maximum target for both Adjusted
EBITDA and cash flow. In combination with the performance against
the strategic and non-financial metrics, this resulted in a 2023
annual bonus outcome for the CEO and CFO of 95% and 100% of
maximum respectively, corresponding to 190% and 150% of salary.
At the time of Chris McGinnis’ appointment as CFO in November
2022, and recognising that he was not to be entitled to a bonus
for the period he served as a Director in 2022, it was agreed that,
provided his performance was to the level expected by the Board
during his first year, the bonus for 2023 would be based on his salary
for the second half of the year of £400,000. The outcomes result
in a total payment of £1,603,600 and £600,000 for the CEO and
CFO respectively. 50% of these amounts (£801,800 and £300,000)
will be paid once the 2023 Annual Report and Accounts has been
signed off, a third of which (£267,267 and £100,000) will be used to
purchase shares in the market at this time, which will be subject to
recovery for two years. Despite the excellent financial performance,
the Remuneration Committee recognises that the ongoing dispute
with our largest customer, Caliplay, has weighed on shareholder
sentiment and Playtech’s stock price performance. The Board and
management are in ongoing discussions with Caliplay but there can
be no certainty on what any outcome might be. The Board is confident
that the outstanding funds will be recovered. In light of the dispute, the
Remuneration Committee has decided to exercise its discretion to
defer settlement of the remaining 50% of the annual bonus amounts
pending resolution on the ongoing litigation with Caliplay.
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)
Relative TSR – bespoke1
Adjusted Diluted EPS
Total
Weighting
37.5%
37.5%
25%
100%
% of award vesting for
threshold performance
Threshold performance
Maximum performance
Actual performance
Outcome
(% of maximum)
25%
6.44% (median)
25%
31.63% (median)
32.73%
(upper quartile)
67.77%
(upper quartile)
25%
36 Euro cents
53 Euro cents
51.5 Euro cents
36.76%
100%
35.65%
93.38%
74.21%
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 Chris McGinnis vested on 26 October 2023 as follows:
Director
Mor Weizer
Chris McGinnis
Original number of awards granted
Number of awards vested
546,000
81,900
405,187
60,778
Total value 1
£1,519,451
£227,918
Total value due to share price
appreciation 2
£35,251
£5,288
1 Based on the share price of £3.75 as at 26 October 2023.
2 Calculated as the share price on 26 October 2023 of £3.75 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.
No award was granted in 2021, due to the Company being in a closed period for 2021, and as such there was no other LTIP vesting in the year.
138 Playtech plc Annual Report and Financial Statements 2023
Remuneration Report
LTIP awards (audited)
On 5 May 2023 the following awards were made to the Executive Directors under the LTIP:
Director
Type of award
Total number of awards
Aggregate market value (£)
Mor Weizer
Chris McGinnis
Nil cost option
Nil cost option
292,548
90,988
1,688,002
525,000
Awards represented 200% of salary for Mor Weizer and 150% of salary for Chris McGinnis based on a share price on grant of 577 pence.
There has been no change in the exercise price or date since the awards were granted.
The 2023 LTIP awards 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
25%
25%
25%
Threshold
Maximum
Performance period
8% p.a. compounded
12% p.a. compounded
01.01.2023–31.12.2025
Median of the
comparator group
Upper quartile of the
comparator group
Median of the
comparator group
Upper quartile of the
comparator group
05.05.2023–04.05.2026
05.05.2023–04.05.2026
1
The bespoke peer group for the 2023 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 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
The Remuneration Committee determined the following treatment
to his variable remuneration.
Salary and fee review
As 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.
2020 LTIP
As disclosed in last year’s report, recognising that Andrew Smith was
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, the Board determined that
Andrew Smith would be entitled to his 2020 LTIP award. As set out
above, the final vesting outcome of the 2020 LTIP award was 74.2%,
resulting in 130,825 awards vesting for Andrew Smith. The value of
these awards on the vesting date was £490,594.
Other payments
As part of Andrew Smith’s settlement agreement, it was determined
that he would be entitled to retain his company car following his
departure from the business. Prior to transferring ownership to
Andrew Smith, the company car was stolen during the year. As such,
the sums recovered from the Company’s insurance claim of £64,000
were paid to Andrew Smith.
2023 annual bonus
As disclosed in last year’s report, recognising that Andrew Smith was
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, the Board determined that
Andrew Smith would be eligible for pro-rata bonus payment for the
period until the end of his notice period during the 2023 financial year
and in relation to the financial proportion of the 2023 annual bonus
only. The amount paid to Andrew Smith was £233,923.
No payments other than those set out above were made to past
Directors in 2023.
Implementation of Policy for 2024
This section sets out the proposed implementation of the Directors’
Remuneration Policy in 2024. The proposed implementation does
not contain any deviations from the Directors’ Remuneration Policy
approved by shareholders at the 2021 AGM.
Accordingly, the Committee reviewed the salary for Mor Weizer, and
it was decided that Mor Weizer would not receive a salary increase.
The average salary increase for 2024 awarded to those employees
across the UK workforce who were eligible for a salary increase was
1.4%. As stated previously, Chris McGinnis will 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.
The Committee reviewed the fees paid to the Chairman and the
Non-executive Directors, and it was decided that these remain
appropriate following the increase awarded on 1 January 2023.
There will therefore be no increases to the fees for this population
effective from 1 January 2024.
As such, the current basic salary levels of the Executive and
Non-executive Directors from 1 January 2024 (together with the
Euro equivalent at 31 December 2023 based on the exchange rate
between Sterling and Euro used in the accounts) are:
• Mor Weizer: £844,000 (€973,697);
• Chris McGinnis: £400,000 (€461,468).
• Chairman: £350,000 (€403,784);
• Non-executive Director base fee: £140,000 (€161,514);
• additional Committee Chair fee: £15,000 (€17,305); and
• Senior Independent Director fee: £160,000 (€184,587).
Playtech plc Annual Report and Financial Statements 2023
139
Remuneration Report
Annual report on remuneration continued
200
180
160
140
120
100
80
60
40
20
0
Dec 13
Dec 14
Dec 15
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Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Dec 23
140 Playtech plc Annual Report and Financial Statements 2023
Playtech
FTSE 250
Implementation of Policy for 2024 continuedBenefitsBenefits 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 2024, 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 Company’s internal business plan. 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.The non-financial and strategic objectives will include ESG measures, consistent with the approach taken in 2023.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.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 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 2023 we hold nil Treasury Shares following the transfer of Treasury Shares to the Employee Benefit Trust during the year. As at 1 January 2023, 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. Remuneration Report
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.
Remuneration of the CEO
(Mor Weizer)
Total remuneration
(€’000)
Annual bonus (% of
maximum)
LTIP vesting (% of
maximum)1
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
1,740
2,449
2,346
4,192
2,055
2,931
1,905
10,802
4,950
2,930
100%
87.5%
100%
—
—
—
93%
70%
25%
22%
65%
24%
100%
100%
—
—
46.16%
74.21%
95%
N/A
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 employees1
The following table sets out the percentage change in the salary/fees, benefits and bonus for each Director from 2020 to 2023 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/fees
Benefits
Bonus
2019 to
2020
2020 to
2021
2021 to
2022
2022 to
2023
2019 to
2020
2020 to
2021
2021 to
2022
2022 to
2023
2019 to
2020
2020 to
2021
2021 to
2022
2022 to
2023
Executive Directors
Mor Weizer
Chris McGinnis
Non-executive
Directors2,5
Brian Mattingley
Ian Penrose
Anna Massion
John Krumins
Linda Marston-
Weston
Samy Reeb7
Ruby Yam7
Wider workforce
Average employee –
UK based
0% -20.0%
N/A
N/A
+2.0%
+3.4%
N/A +1,029.3%4
+31.6% 3
N/A
-1.6% +10.5%
N/A
-4.1%
N/A +1,101.7% 4
-63.1% +233.3% +2.0%
N/A
N/A
N/A
N/A
+69.6%6
N/A
+2.5% +116.7% +12.3%
+9.2%
+2.5% +114.4%
+9.2%
+2.5% +114.4%
N/A
N/A
N/A
N/A +260.0%6
N/A
N/A
N/A
N/A
-25.5%
-33.2%
-38.5%
-53.9%
-38.5%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-1.7%
N/A 4
N/A
N/A
N/A
N/A
N/A
N/A
N/A
+2.7% +4.5%
+11%
+8%
+6% +0.8%
+9.4%
+6.8%
+22%
-15.6%
+83%
-10%
1
2
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).
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 increase in the value of Chris McGinnis’ salary and benefits in 2023 was due to his appointment to the Board part way through 2022. No change in the bonus amount can be provided for 2023 as
he did not receive a bonus in respect of service as an Executive Director in 2022.
5 The increase for the Non-executive Directors in 2022 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 in 2022 was due to their appointment to the Board part way through 2021.
7 Samy Reeb and Ruby Yam joined the Board in the year; therefore we are unable to compare changes in remuneration from prior years.
Playtech plc Annual Report and Financial Statements 2023
141
Remuneration Report
Annual report on remuneration continued
142 Playtech plc Annual Report and Financial Statements 2023
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 2023:YearMethodology25th percentile pay ratioMedian pay ratio75th percentile pay ratio2023Method A59:141:128:12022Method A114:175:151:12021Method A229:1160:1107:12020Method A43:131:121:12019Method A73:152:135:1The employees included are those employed on 31 December 2023 and remuneration figures are determined with reference to the financial year to 31 December 2023. The CEO is paid in GBP Sterling and the ratios have been calculated using the CEO’s 2023 total single figure of remuneration expressed in GBP Sterling (£2.5 million). Option A, as set out under the reporting regulations, was used to calculate remuneration for 2023, in line with the approach taken in 2022, 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 2022 financial year) as 2023 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.The table below sets out the salary and total pay and benefits for the three quartile point employees:25th percentile50th percentile75th percentileSalaryTotal pay and benefitsSalaryTotal pay and benefitsSalaryTotal pay and benefits2023£42,032£43,443£53,138£62,068£80,837£92,117The 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 lower ratio this year reflects the fact that there was no LTIP vesting for the CEO in respect of the performance period ended 31 December 2023.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 payThe following table sets out the amounts paid in share buybacks and dividends, and total remuneration paid to all employees:Payouts 2023€’m2022€’mChange%Dividends——0%Share buybacks——0%Total employee remuneration1444.7435.0+2.2%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. Remuneration Report
Directors’ interests in ordinary shares (audited)
Director
Executive Directors2,3,6
Mor Weizer1,4
Chris McGinnis
Non-executive Directors6
Brian Mattingley
Ian Penrose
Anna Massion
John Krumins5
Linda Marston-Weston
Samy Reeb
Ruby Yam5
Ordinary shares
Share awards and share options
31 December
2023
2022
2023
2022
Total interests at
December 2023
376,475
5,000
332,050
5,000
2,761,662
151,766
2,863,949
81,900
3,138,137
156,766
—
20,000
32,000
18,000
—
—
—
—
17,500
32,000
18,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
20,000
32,000
18,000
—
—
—
1 The CEO’s and CFO’s share ownership is 200% and 6% of salary respectively based on the closing share price of 448.6 pence on 31 December 2023.
2 Share options are granted for nil consideration.
3
4
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.
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. The awards
granted to Mr Smith lapsed on cessation as part of the settlement agreement. Mr Weizer and Mr McGinnis were each also granted an award in 2023 over 292,548 and 90,988 shares respectively.
The Adjusted EPS performance condition is based over the financial year ending 31 December 2025, whilst the relative TSR performance conditions are based over the period of 5 May 2023 to
4 May 2026 with normal vesting scheduled for 4 May 2026.
5 The shareholdings for John Krumins and Ruby Yam have been disclosed at the date at which they stepped down from the Board.
6 There was no movement in share interests between 31 December 2023 and the date of publication.
Role and membership
The Remuneration Committee is currently comprised entirely of three independent Non-executive Directors as defined in the Code. Anna
Massion chairs the Committee, and the other members are Ian Penrose and Linda Marston-Weston.
Details of attendance at the Remuneration Committee meetings are set out on page 114 and their biographies and experience on pages
108 and 109.
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).
Playtech plc Annual Report and Financial Statements 2023
143
Remuneration Report
Annual report on remuneration continued
144 Playtech plc Annual Report and Financial Statements 2023
Role and membership continuedThe Remuneration Committee has a planned schedule of at least three meetings throughout the year, with additional meetings and Zoom calls held when necessary. During 2023, the Committee met four times, addressing a wide variety of issues, including:MonthPrincipal activityJanuary• Review of bonus and other incentivisation arrangements in relation to Executive Directors and members of senior management• Review of pay increases for 2023March• Consideration of LTIP grant proposals for 2023• Consideration of incentivisation arrangements in relation to members of senior management at Snaitech• Consideration of fees for Non-executive Directors• Consideration of benchmarking proposalsMay• Finalising LTIP grants for 2023November• Bonus proposals for 2023• Review of LTIP allocation bands• New Remuneration Policy for 2024 AGMExternal advisersPwC served as the independent adviser to the Committee during 2023. 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 £80,040 on a time and materials basis.Engagement with shareholders and shareholder votingAt the 2023 AGM the total votes received in favour of resolution for the Remuneration Report were 81.65%. Following the AGM and throughout the year, the Group has continued to engage with shareholders. The Committee consulted with major shareholders following the AGM to understand their views regarding the level of dissent shown in respect of the Remuneration Report. The principal reason given by those shareholders who were unable to support the resolutions related to the leaving arrangements in respect of the former CFO. 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 2023. 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 24 May 2023 respectively, the results of which were as follows:ForAgainstWithheldApproval of Remuneration Report (24 May 2023)206,807,047(81.65%)46,468,278(18.35%)16,701,536Approval of Remuneration Policy (26 May 2021)177,453,581(75.47%)57,668,932(24.53%)155,838 Remuneration Report
Engagement with the wider workforce
With respect to employee engagement, the Board and Chair 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 and Compliance 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.
Furthermore, and working in conjunction with the Sustainability and
Public Policy 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 2023, the Board discussed, reviewed and engaged on a
number of stakeholder issues. The material stakeholder topics
discussed by the Board in 2023 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;
• 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
Anna Massion
Chair of the Remuneration Committee
26 March 2024
Playtech plc Annual Report and Financial Statements 2023
145
•
information relating to financial instruments, as provided in the
notes to the financial statements; and
Linda Marston-Weston
Governance Report
Governance Report
Directors’ report
The Directors are pleased to present to shareholders their
report and the audited financial statements for the year ended
31 December 2023.
The Directors’ Report should be read in conjunction with the other
sections of this Annual Report: the Strategic Report, including
the 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 104 to 151;
• related party transactions as set out in Note 37 to the
financial 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 151.
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.
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 1 to 102 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 95 to 100 of this Annual Report and
details of the policies and the use of financial instruments are set out in
Note 6 to the financial statements.
146 Playtech plc Annual Report and Financial Statements 2023
Directors and Directors’ indemnity
The Directors of the Company who held office during 2023 and to
date are:
Appointed
Resigned
Brian Mattingley
Mor Weizer
Ian Penrose
Anna Massion
John Krumins
Chris McGinnis
Samy Reeb
Ruby Yam
01.06.2021
02.05.2007
01.09.2018
02.04.2019
—
—
—
—
02.04.2019
29.09.2023
01.10.2021
28.11.2022
04.01.2023
—
—
—
01.06.2023
11.07.2023
All of the current Directors will stand for election and/or re-election at
the forthcoming Annual General Meeting to be held on 22 May 2024.
Save as set out in Note 37 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 2023
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
104 to 151 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.
Governance Report
Results and dividend
Significant shareholdings
The results of the Group for the year ended 31 December 2023 are
set out on pages 161 to 235. The Company is not recommending the
payment of a final dividend for the year ended 31 December 2023.
This situation will be reviewed throughout 2024.
Going concern, viability, responsibilities and disclosure
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 7 to the financial statements.
The principal and emerging risks are set out in detail in the Strategic
Report on pages 97 to 100 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 2023, 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 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 three-year forecast
considering the viability status for the period to December 2026 in
accordance with the Group’s three-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 101 and 102. Given the above, the
Directors continue to adopt the going concern basis in preparing
the accounts.
As of 22 March 2024, the Company had been advised of the following
significant shareholders each holding more than 3% of the Company’s
issued share capital, based on 309,294,243 ordinary shares in issue.
No. of ordinary
shares
Shareholder
%
Interactive Brokers (EO)
Albula Investment Fund
TT Bond Partners
Future Capital Group
Setanta Asset Management
Mr Paul Suen Cho Hung
Vanguard Group
Blackrock
Dr Choi Chiu Fai Stanley
Dimensional Fund Advisors
7.82
5.37
4.93
4.85
4.58
4.56
4.54
3.75
3.72
3.36
24,185,203
16,594,432
15,237,921
15,000,000
14,170,732
14,115,010
14,031,959
11,600,111
11,517,241
10,385,793
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 22 March 2024 and the date of this report.
Capital structure
As at 28 February 2024, the Company had 309,294,243 issued
shares of no-par value. 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 resolutions covering the authorities under the Company’s articles
of association for the Directors to issue new shares for cash and
purchase its own shares were not passed at the Company’s Annual
General Meeting held in May 2023. Consideration is being given as to
whether resolutions will be put forward to shareholders at this year’s
Annual General Meeting to consider and approve 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).
Playtech plc Annual Report and Financial Statements 2023
147
Governance Report
Directors’ report continued
Voting rights
Appointment of Directors
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
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 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; 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.
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
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 37 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.
148 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Political and charitable donations
During the year ended 31 December 2023 the Group made charitable
donations of €2.5 million (2022: €2.7 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.
The Group made no political donations during this period (2022: Nil).
Sustainability and employees
Information with respect to the Group’s impact on the environment and
other matters concerning sustainability can be found on pages 48 to 87.
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 1 to 102
and in the statement dealing with our relationship with stakeholders on
pages 44 to 47.
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 44 to 47. 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
Playtech plc has established a branch in England and Wales.
The Company’s subsidiary, Playtech Holdings Limited, has
established branches in Argentina, England and Wales. 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 Retail
Limited has established a branch in The Philippines. S-Tech Limited
has established a branch in The Philippines. Paragon Customer
Care Limited has established a branch in The Philippines. All three
branches in The Philippines are in the process of being closed.
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 110 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)
Interest capitalised by the Group
9.8.4(2)
Unaudited financial information
9.8.4(4)
Long-term incentive scheme only involving a Director
9.8.4(5)
Directors’ waivers of emoluments
9.8.4(6)
Directors’ waivers of future emoluments
9.8.4(7)
Non-pro-rata allotments for cash
9.8.4(8)
Non-pro-rata allotments for cash by major subsidiaries
9.8.4(9)
Listed company is a subsidiary of another
9.8.4(10)
Contracts of significance
9.8.4(11)
Contracts of significance involving a controlling shareholder
9.8.4(12) Waivers of dividends
9.8.4(12) Waivers of future dividends
9.8.4(14)
Agreement with a controlling shareholder
None
None
None
None
None
None
None
N/A
None
None
None
None
None
Playtech plc Annual Report and Financial Statements 2023
149
Governance Report
Directors’ report continued
Additional information provided pursuant to Listing Rule 9.8.6
Listing Rule
Information included
Disclosure
9.8.6(1)
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
See page 143
9.8.6(2)
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
See page 147
9.8.6(3)
The going concern statement
See page 94
9.8.6(4)(a) Amount of the authority to purchase own shares available
Nil
at the year end
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
9.8.6(5)
Compliance with the principles of the UK Corporate
Governance Code
None
None
None
See the statement on page 110
9.8.6(6)
Details of non-compliance with the UK Corporate Governance Code See the statement on page 110
9.8.6(7)
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 112. The Chairman and the Non-executive Directors
serve under letters of appointment described on page 112
9.8.6(8)
TCFD Recommendations and Recommended Disclosures
See pages 75 to 81
9.8.6(9)
Statement on board diversity
9.8.6(10)
Numerical data on ethnic background
See page 113
See page 113
9.8.6(11)
Explanation of approach to collecting data for LR9.8.6 R (9) and (10)
See page 113
150 Playtech plc Annual Report and Financial Statements 2023
Governance Report
Statement of Directors’ Responsibilities
Website publication
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 FRS 101 Reduced
Disclosure Framework.
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.
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.
In preparing each of the Group and Parent Company financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
Directors’ responsibilities pursuant to DTR4
Each of the Directors, whose names and functions are listed within
the Governance section on pages 108 and 109, 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
• make judgements and accounting estimates that are reasonable
• 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 2024 is scheduled for 22 May 2024.
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
26 March 2024
and prudent;
•
•
for the Group financial statements 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;
for the Parent Company financial statements state whether they have
been prepared in accordance with UK accounting standards (FRS
101), subject to any material departures disclosed and explained in
the parent Company financial statements;
• assess the Group and Parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern;
• use the going concern basis of accounting unless they either intend
to liquidate the Group or the Parent Company or to cease operations,
or have no realistic alternative but to do so; and
• prepare financial statements which give a true and fair view of the
state of affairs of the Group and the Parent Company and of the profit
or loss of the Group and the Parent Company for that period.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Parent Company and enable them to
ensure that its financial statements comply with the Isle of Man
Companies Act 2006. They are responsible for such internal control
as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities. The Directors
are responsible for the maintenance and integrity of the corporate and
financial information included on the Company’s website. Legislation
in the Isle of Man governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
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, are fair, balanced
and understandable and provide the information necessary for
shareholders to assess the Group’s performance, business model
and strategy.
Playtech plc Annual Report and Financial Statements 2023
151
Financial Statements
Financial Statements
Financial
Statements
Financial Statements
153 Independent auditor’s report
161 Consolidated statement of comprehensive income
162 Consolidated statement of changes in equity
163 Consolidated balance sheet
165 Consolidated statement of cash flows
167 Notes to the financial statements
236 Company statement of changes in equity
237 Company balance sheet
238 Notes to the Company financial statements
246 Five-year summary
Company information
247 Company information
152 Playtech plc Annual Report and Financial Statements 2023
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 2023 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 2023 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 statement of cash flows, notes to the financial statements
and notes to the Company financial statements, including a summary of material 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 public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the
Group or the Parent Company.
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 included:
• evaluating the Directors’ process in determining the going concern assessment of the period to 30 June 2025;
•
confirming the assessment and underlying projections were approved by the Board as well as being prepared by appropriate individuals with
sufficient knowledge of the Group’s markets, strategies and risks;
• understanding and assessing the key assumptions in the cash flow forecasts and challenging these against prior performance and our
knowledge of the business and industry;
• confirming, 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;
•
assessing the Directors’ stress test scenarios and challenging whether other reasonably possible scenarios could occur;
• specifically assessing through a stress test the risk of the Caliplay outstanding receivables (see additional details below) not being recovered
and no further cash being received in the going concern period as result of the ongoing dispute;
• 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 and evaluating the Directors’
assessment of covenant compliance throughout the going concern assessment period to 30 June 2025;
• considering the impact of inflation including energy costs, other macroeconomic matters and climate change;
• reviewing post-year-end cash position to assess any potential deterioration in cash balances;
• challenging the Directors as to matters outside of the going concern assessment period, including the potential long-term impact of the
dispute with Caliplay; and
•
considering the adequacy of the disclosures relating to going concern included within the Annual Report against the requirements of
the accounting standards, the impact of the dispute with Caliplay and the 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’s 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.
Playtech plc Annual Report and Financial Statements 2023
153
Financial Statements
Independent auditor’s report continued
To the members of Playtech plc
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
The coverage achieved from the full scope audits which included significant and non-significant components was 92%
(2022: 94%) of Group revenue and 90% (2022: 84%) of Group total assets. Further specific audit procedures were undertaken
on non-significant components to ensure sufficient audit coverage.
Revenue recognition
Caliplay legal dispute
Valuation and disclosure of the Playtech M&A Call Option relating to Caliplay
Group Materiality
€13.0 million (2022: €12.0 million) based on 3% (2022: 3%) of adjusted EBITDA.
2023
2022
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 system 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.
Full scope audit procedures were performed on eight components; five of these were considered significant with the other three being
undertaken to ensure appropriate audit coverage. Four of the significant components were audited by the Group audit team with the remaining
significant component being audited by BDO Italy. The three other full scope audits were undertaken by the Group audit team, BDO Sweden and
BDO Austria.
In respect of 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 had 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, directing the scope
and approach of the audit and performing a detailed review of the audit files. The review of the audit files was undertaken with the support of our
IT specialists. For the component auditors of the non-significant components we provided group instructions, directed the scope of their work
and reviewed reporting returned to us.
Climate change
Our work on the assessment of potential impacts of climate-related risks on the Group’s operations and financial statements included:
• enquiries and challenge of management to understand the actions it has taken to identify climate-related risks and their potential impacts on
the financial statements and adequately disclose climate-related risks within the Annual Report;
• our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change affects this
particular sector; and
• review of the minutes of Board and Sustainability Committee meetings and other papers related to climate change and performing a risk
assessment as to how the impact of the Group’s commitments may affect the financial statements and our audit.
We also assessed the consistency of management’s disclosures included as other information on page 150 with the financial statements and
with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any key audit matters materially impacted by climate-related risks and
related commitments.
154 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
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
6 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 KAMs in respect of
revenue consist 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, the 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 tested B2B revenue recognised with the support of IT specialists by completing
the following:
• carried out end-to-end walkthroughs to understand the IT system, processes and
controls in place;
• tested the operating effectiveness of certain controls within the Group’s main B2B
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, independently recalculated revenue based
on the underlying source data to the contractual terms in place and agreed the
invoices issued to cash receipt;
• tested the adjustments to revenue made in respect of variable consideration
where either customer incentives or other contractual variations or potential
variations existed;
• tested a sample of credit notes both during the year and post year end; and
•
for a sample of customers, analysed revenue for the year on a monthly basis to
identify exceptions and, where considered necessary, undertook further testing
including assessing the underlying source data.
B2C revenue in respect of Snaitech
We tested B2C revenue recognised with the support of IT specialists by completing
the following:
• carried out end-to-end walkthroughs to understand the IT system, processes and
controls in place for each of the significant revenue sub-streams, being gaming
machines, online gaming, online betting and retail betting;
• tested the operating effectiveness of IT general controls, including user access
controls, change management and data processing management;
• tested the operating effectiveness of key revenue controls, including controls around
data transfers between systems, controls ensuring the pre-approval of all bets by the
government ADM system, the monthly reconciliation between SAP and ADM, and the
accurate addition of all new revenue contracts onto SAP;
•
•
for online and retail betting, performed a reconciliation of total bets in the year from the
operating platform to the government ADM reports; and
for a sample of transactions for all revenue streams, agreed the transactions to the
underlying transactional system and through to cash receipts.
Key observation
Based on the work performed we did not identify any evidence of material manipulation
or misstatements in the data and consider that revenue has been appropriately recognised.
Playtech plc Annual Report and Financial Statements 2023
155
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 continued
Key audit matter (KAM)
Caliplay
legal dispute
The Directors’
disclosure of
the judgements
and estimates
surrounding the risks
are detailed in Note
7 to the financial
statements with
accounting policies
in respect of the
revenue streams
detailed in Note 6.
The legal dispute gives rise to a number of risks
principally in respect of revenue recognition and
recovery of associated receivables from Caliplay as
well as the associated disclosures.
There are also risks that may arise dependent on
the outcome of the dispute such as impairment of
goodwill, impairment of Parent Company investments
and carrying value of deferred tax assets.
Our KAM relating to the additional risks in revenue
recognition arising from the Caliplay legal dispute is
in respect of the following revenue streams:
B2B licence fee (“software fees”)
Due to the dispute with Caliplay (as detailed in Note 7
to the financial statements), €32.3 million of invoices
issued in the period from August to December 2023 in
respect of the above services remained unpaid at the
date of approval of the financial statements.
Based on the claims made by Caliplay as to the
reason for non-payment of invoices, there is a risk
over whether performance obligations have been
met and hence the existence and accuracy of
revenue recognised.
Additional B2B services fee
The dispute with Caliplay has also resulted in the
non-payment of the additional B2B services fee
invoices issued to Caliplay for the period July to
December 2023, which totalled €54.2 million.
The non-payment has occurred simultaneously with
the invoice dispute described above. It is related to
Caliplay notifying the Group on 5 January 2024 of a
significant provision that Caliplay alleges was made in
its own financial statements on 3 January 2024, which
reduces the Caliplay profit for the year. Due to the size
of the provision notified to Playtech, Caliplay claims
that the additional B2B services fee in the period July
to September 2023 is €Nil and it is anticipated that
it will further claim that the additional B2B services
fee in the period October to December 2023 is also
less than the amounts Playtech has invoiced. There
is therefore a risk over the existence and accuracy of
revenue recognised.
Recovery of receivable
With the support of its legal experts, the Group
has reviewed Caliplay’s response to Playtech’s
legal claim for payment in relation to all the invoices
referred to above. Based on the information
received, the Group does not consider Caliplay’s
claim or provision to have merit and as such
recognised the receivable of €86.5 million and
associated revenue in full in the year ended and as
of 31 December 2023. There is therefore a risk in
respect of the carrying value of the receivable.
The Directors have also made a judgement that
trading will continue with Caliplay until the contract
expires in 2034. However, should this change such
that future cash flows generated from Caliplay
are materially impacted this gives rise to potential
risks in respect of impairment of goodwill (Sports
B2B and Services CGUs), impairment of Parent
Company investments and reduction in carrying
value of deferred tax assets.
In respect of the overall legal dispute with Caliplay,
there is a further risk that the disclosures (including
any potential financial statement impact) in respect of
the estimates and judgements are not complete and/
or accurate.
156 Playtech plc Annual Report and Financial Statements 2023
How the scope of our audit addressed the key audit matter
Our testing approach consisted of the following:
Software fees
•
In respect of the invoices issued in the period August to December 2023, we
worked with our IT specialists to independently recalculate the invoice value.
This was based on the underlying source data extracted from IMS and we
assessed this against the revenue recognised.
• With the support of external legal experts directly engaged by us, we reviewed
the legal and contractual merits of the defence filed by Caliplay in respect of
non-delivery of the performance obligations.
•
In addition we reviewed the privileged legal advice received by Playtech from its
own legal experts (which was released to us confidentially on a limited waiver
basis) to assess the claims made by Caliplay.
• We assessed whether any contradictory evidence or legal position, including
alternative case law, was apparent which was sufficiently compelling that it
could impact the judgement reached by the Group.
• We scrutinised management’s accounting assessment under IFRS 15 in respect
of recognition of revenue and challenged if the claims made by Caliplay meant
that performance obligations had not been met and that Playtech was not
entitled to the revenue.
Additional B2B services fee
• We agreed the invoices issued in the period July to December 2023 to profit
information and monthly statements provided to Playtech by Caliplay. In respect
of the month of December 2023 we agreed the adjustment made by the Group
to remove the impact of the provision recorded by Caliplay.
• With the support of our external legal experts, we reviewed the contractual
matters in respect of the defence filed by Caliplay to Playtech’s legal claim, as
well as Playtech’s own legal advice on this matter, to assess Playtech’s position
that the claim made by Caliplay as the basis for non-payment had no merit.
• With the support of our relevant expert from BDO Mexico, we reviewed
management’s and management’s expert’s assessment of the merits of the
significant provision recorded by Caliplay.
Recovery of receivable
In consideration of the recognition of the receivable, with the support of our
experts we also considered the recoverability of the receivable by reference
to the contractual terms, the ability of Caliplay to make the payment and the
enforceability of judgements made in the UK against a Mexican business.
In reaching its judgement that the receivable will be recovered in full, management was
supported by a number of third-party experts. We assessed the objectivity, expertise
and qualifications of the experts as well as reading their report and advice.
Disclosures
With the support of our technical specialists and based on our knowledge of the
facts and circumstances, we reviewed the disclosures made in Note 7 to ensure
they were sufficiently complete and accurate.
Key observations
Based on the contracts and legal arguments as at the date of approval of these
financial statements, and having taken legal advice, Playtech believes the
receivable and associated revenue should be recognised in full as it considers
Caliplay’s position to be without merit.
Our assessment is that management’s position is supportable having considered
all the evidence presented to us, having considered alternative arguments, having
challenged management on the basis for its judgements and having been assisted
by experts from BDO Mexico and by external legal advice engaged specifically for
the purposes of our audit and who reported directly to us.
We draw your attention to Note 7 in the financial statements which sets out the key
judgements and estimates and, where appropriate, their financial impact. As well
as impacts on judgements in the current period, the disclosures set out further
risks in respect of future periods if Playtech is not successful in its legal claim and
future trading is impacted. This includes areas such as goodwill impairment, Parent
Company investment impairment and carrying value of deferred tax assets.
We assessed the disclosures given in Note 7 and consider that these sufficiently
reflect the current position with respect to the Caliplay legal dispute and the impact
on the financial statements and business.
Financial Statements
An overview of the scope of our audit continued
Key audit matters continued
Key audit matter (KAM)
How the scope of our audit addressed the key audit matter
Valuation and
disclosure of
the Playtech
M&A Call Option
over Caliplay
Disclosure of
the judgements
and estimates
surrounding the
risks are detailed in
Notes 7 and 21 to the
financial statements
with accounting
policies detailed
in Note 6.
This was considered a KAM due to the level of audit team effort, and the degree
of complexity, judgement and estimation required in the valuation as well as
associated disclosures. The risk was compounded in the current year by the
existence of the ongoing dispute between the Group and Caliplay.
With the support of our valuation, IT and financial
modelling experts, we challenged the key assumptions
used by the Group in the discounted cash flow model.
To do this we:
• challenged the cash flows used and key
assumptions underlying the cash flows, assessing
them by reference to historical performance and
where possible by reference to future growth rates
compared to third-party market data;
•
recalculated the discount rates and challenged as to
whether appropriate risk premiums had been applied
both in respect of the growth forecasts and also the
ongoing dispute;
• challenged the probabilities applied to the both the
option exit route and the timing of exercise, including
a scenario in which the exit date extended beyond
the scenarios modelled by management;
• assessed the discounts applied to the valuation
for potential restrictions on the sale of the shares
post exercise;
• assessed the accounting approach to the reduction
of the rights that a service provider to the Group held
under its service agreement to the Caliplay shares;
• assessed the sensitivity analysis performed to
changes in key assumptions (such as discount rate,
EBITDA margin, exit multiple and exit date);
• considered any additional sensitivities required
based on the audit team’s assessment of the key
inputs and judgements;
•
in respect of the dispute with Caliplay relating to
the 2021 Option, assessed the Group’s judgement
and associated disclosures over the impact of the
dispute in respect of the valuation of the Playtech
M&A Call Option. This included reviewing third-party
legal advice received by the Group as well as our
own review of the contractual terms;
• challenged the impact and probability of exercise of
the 2025 Option;
• 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
was supported by a third-party expert. We assessed
the objectivity, expertise and qualifications of
the expert.
Key observations
Based on the work performed we consider that the fair
value is reasonable, the sensitivities demonstrate the
susceptibility of the fair value to change in assumptions
and the disclosures meet with the requirements of the
accounting framework.
The valuation requires judgement in terms of the inputs and the methodology
applied to calculate the fair value of €730.2 million (2022: €524.0 million).
With the support of management’s expert, the Group determined the fair value
based on a discounted cash flow (DCF) approach. This approach is consistent
with the approach used as of 31 December 2022.
The DCF approach includes risk due to the estimates and judgements required,
with these further compounded in the current year due to the ongoing litigation
between the Group and Caliplay.
Part of the ongoing dispute relates to whether Caliplay still holds an option
which permits it to redeem the additional B2B services fee element of
the agreement, upon which the Group has sought a declaration from the
English Court.
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 “2021 Option”). 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.
Should it be declared by the English Court that Caliplay still has its redemption
option and Caliplay then exercises said option, this would cancel the Playtech
M&A Call Option held by the Group.
In arriving at the fair value of the equity Call Option derivative, the Group
has made a judgement that the option has expired. The English Court may
determine that the option is exercisable and Caliplay may then choose to
exercise it. In this situation, the amount payable by Caliplay to the Group upon
exercise would either be agreed between the parties or, failing that, would be
determined by an independent investment bank valuing the Group’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 this may
materially affect the fair value of the equity Call Option held by the Group.
The legal dispute with Caliplay has developed through 2023 with the additional
dispute concerning the software fees and the additional B2B services fee
detailed above. This additional dispute gives rise to further risks in respect of
the cash flows used to determine the fair value of the Playtech M&A Call Option
together with the assumptions applied to those cash flows, principally those in
respect of discount rate, exit date and method of exit.
Due to the ongoing dispute, the Group has also changed its assessment of the
probability of exercise in respect of a further redemption option held by Caliplay
having previously considered the probability of this being exercised as nil.
This redemption option states that from 1 January 2025 (the “2025 Option”),
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, then 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 or acquire
were to occur, then this would extinguish the Playtech Call Option (to the extent
not exercised prior thereto) and the Playtech M&A Call Option. The exercise
of this option would require a payment by Caliplay to the Group, calculated by
reference to the services fee to the period to 31 December 2034 as per the
2021 redemption option detailed above.
Finally, during the year there was a reduction of the percentage right to
Caliplay shares that a service provider of the Group which provided services
to Caliplay on behalf of the Group held under its services agreement. This was
partly redeemed through a €41.3 million redemption payment being made
by the Group. As the value of this right was previously deducted from the fair
value of the Playtech M&A Call Option, as the right has reduced, this therefore
forms part of the uplift in the period. There is a risk that the accounting for the
redemption payment is not appropriate.
Playtech plc Annual Report and Financial Statements 2023
157
Financial Statements
Independent auditor’s report continued
To the members of Playtech plc
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
2023
€13.0 million
2022
€12.0 million
2023
€6.5 million
2022
€6.0 million
3% of adjusted EBITDA
3% of adjusted EBITDA
50% of Group materiality
50% of Group materiality
Adjusted EBITDA is the key
metric used by analysts
and the Directors in
assessing the performance
of the business and in
banking covenants and
is the metric expected
to influence economic
decisions of users of the
financial statements.
Adjusted EBITDA is the key
metric used by analysts and
the Directors in assessing the
performance of the business
and in banking covenants
and is the metric expected
to influence economic
decisions of 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 50% of Group materiality.
This was calculated as
a percentage of Group
materiality for Group
reporting purposes
given the assessment of
aggregation risk.
Performance materiality
€8.5 million
€7.8 million
€4.2 million
€3.9 million
Basis for determining
performance materiality
Rationale for the
percentage applied for
performance materiality
65% of Group materiality
65% of Group materiality
This was set by the audit
team in reference to the
level of adjustments
identified in the prior year,
the level of sampling work
required and the number
of components.
This was set by the audit
team in reference to the level
of adjustments identified
in the prior year, the level of
sampling work required and
the number of components.
65% of Parent
Company materiality
65% of Parent
Company materiality
This was set by the audit
team in reference to the
level of adjustments
identified in the prior year.
This was set by the audit
team in reference to the level
of adjustments identified in
the prior year.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, based on a percentage of between
19% and 51% (2022: 25% and 60%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that
component. Component materiality ranged from €2.5 million to €6.6 million (2022: €3 million to €7 million). In the audit of each component, we
further applied performance materiality levels of 65% (2022: 65%) 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 it all individual audit differences in excess of €260k (2022: €240k). We also agreed
to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
158 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
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
Other
Code provisions
• The Directors’ statement with regard to the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 147.
• 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 101.
•
•
•
The Directors’ statement on fair, balanced and understandable set out on page 146.
The Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 101.
The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems set out on pages 95 to 100.
•
The section describing the work of the Audit Committee set out on pages 124 to 128.
Responsibilities of Directors
As explained more fully in the Director’s 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.
Playtech plc Annual Report and Financial Statements 2023
159
Financial Statements
Independent auditor’s report continued
To the members of Playtech plc
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. 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 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 Isle of Man Companies Act 2006, the UK Listing
Rules, certain gaming licence requirements, UK adopted International
Accounting Standards and tax legislation.
Our procedures in respect of the above included:
• enquiries with the finance team, in-house legal counsel, the Head of
Compliance and the Group Tax Director;
• review of minutes of meetings of those charged with governance for
any instances of non-compliance with laws and regulations;
• review of internal audit reports;
• review of correspondence with regulatory and tax authorities for
any instances of non-compliance with laws and regulations;
• review of financial statement disclosures;
• use of own knowledge in respect of regulatory changes in
the industry;
•
involvement of tax and financial crime specialists in the audit; and
• review of legal expenditure accounts to understand the nature of
expenditure incurred.
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 financial statements to
material misstatement, including fraud. Our risk assessment
procedures included:
• enquiry with management, the Audit Committee and those
charged with governance regarding any known or suspected
instances of fraud;
• obtaining an understanding of the Group’s policies and procedures
relating to:
• detecting and responding to the risks of fraud; and
•
internal controls established to mitigate risks related to fraud;
• review of minutes of meetings of those charged with governance for
any known or suspected instances of fraud;
• discussion amongst the engagement team including involvement
of our forensic specialists as to how and where fraud might occur in
the financial statements;
• review of internal audit and whistleblowing reports;
• performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud; and
• considering remuneration incentive schemes and performance
targets and the related financial statement areas impacted by these.
160 Playtech plc Annual Report and Financial Statements 2023
Based on our risk assessment, we considered the areas most
susceptible to fraud to be management override of controls and
revenue recognition. Our procedures in respect of assessing fraud
risk included:
• testing a sample of journal entries throughout the year split between
a random sample of journals and those meeting defined fraud risk
criteria, by agreeing to supporting documentation;
• testing a sample of journal entries posted to revenue, including
those with unusual account combinations;
•
identifying and assessing any journals posted by unexpected users
or users with privileged IT access rights;
• reviewing any unusual or related party transactions that do not
appear to be within the ordinary course of business;
• detailed substantive testing on revenue (refer to the KAMs section
for more detail);
• challenging assumptions and judgements made by management in
its significant accounting estimates and judgements, including the
impact of the Caliplay matter described in the KAMs section above,
impairment testing, the measurement of provisions, valuation of
derivative instruments, assessment of expected credit losses and
recognition of deferred tax assets; and
• communicating relevant identified laws and regulations and
potential fraud risks to all engagement team members including
component engagement teams which were deemed to have
appropriate competence and capabilities 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 or 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 our engagement letter dated 9 October 2023 and
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
26 March 2024
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
2023
2022
Actual
€’m
Adjusted
€’m 1
Actual
€’m 2
Adjusted
€’m 1, 2
Note
10
11
13
14A
14B
21A
21B
21C
21A
11
11, 15
11
9
Financial Statements
Consolidated statement of comprehensive income
For the year ended 31 December 2023
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 property, plant and equipment and intangible assets
Profit on disposal of property, plant and equipment 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
Profit from continuing operations
Profit from discontinued operations, 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 on remeasurement of employee termination indemnities
Other comprehensive (loss)/income 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)
1,706.7
(1,147.1)
(146.7)
(6.4)
406.5
(194.4)
(89.8)
1.4
12.3
(46.2)
(0.8)
(6.6)
153.4
—
235.8
(130.7)
105.1
—
105.1
(7.7)
—
—
(7.7)
97.4
105.1
1,706.7
(1,145.1)
(124.3)
(5.0)
432.3
(151.8)
—
1.4
12.3
(42.9)
(0.8)
—
—
—
250.5
(93.7)
156.8
—
156.8
(7.7)
—
—
(7.7)
149.1
156.8
97.4
149.1
16
16
16
16
34.7
33.7
34.7
33.7
51.7
50.2
51.7
50.2
1,601.8
(1,077.5)
(147.3)
(14.7)
362.3
(170.1)
(38.5)
—
11.6
(62.8)
(3.8)
(0.3)
6.0
(8.8)
95.6
(55.0)
40.6
47.0
87.6
1,601.8
(1,073.5)
(118.2)
(14.7)
395.4
(128.1)
—
—
11.6
(59.7)
(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
Adjusted numbers relate to certain non-cash and one-off items. The Board of Directors believes that the adjusted results more closely represent the consistent trading performance of the business.
A full reconciliation between the actual and adjusted results is provided in Note 11.
2 Comparative information has been re-stated due to change in accounting policy. Further details are provided in Note 4C.
Playtech plc Annual Report and Financial Statements 2023
161
Financial Statements
Consolidated statement of changes in equity
For the year ended 31 December 2023
Balance at 1 January 2022
Adjustment on initial recognition of IAS 12
amendment (Note 4A)
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
606.0
(0.5)
1,025.0
(23.2)
(3.7)
(22.7)
1,580.9
0.3
1,581.2
—
—
1.5
—
—
—
1.5
—
1.5
Adjusted balance at 1 January 2022
606.0
(0.5)
1,026.5
(23.2)
(3.7)
(22.7)
1,582.4
0.3
1,582.7
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
Equity-settled share-based payment charge
Total contributions and distributions
Change 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 2022/1 January 2023
606.0
0.4
1,113.0
(17.2)
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
Equity-settled share-based payment charge
Transfer from treasury shares to
Employee Benefit Trust
Total contributions and distributions
Total transactions with owners of the Company
—
—
—
—
—
5.8
5.8
5.8
—
—
—
—
—
—
—
—
105.1
—
105.1
(11.9)
6.3
6.7
1.1
1.1
—
—
—
11.9
—
(12.5)
(0.6)
(0.6)
Balance at 31 December 2023
611.8
0.4
1,219.2
(17.8)
—
—
—
—
—
—
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
1,702.5
— 1,702.5
—
(7.7)
105.1
(7.7)
(7.7)
97.4
—
—
—
—
—
—
6.3
—
6.3
6.3
—
—
—
—
—
—
—
—
105.1
(7.7)
97.4
—
6.3
—
6.3
6.3
(7.4)
1,806.2
— 1,806.2
162 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Consolidated balance sheet
As at 31 December 2023
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
Provisions for risks and charges
Other non-current liabilities
Non-current liabilities
Note
18
19
20
21A
21B
21C
23
33
22
23
24
25
26
27
28
29
19
33
31
30
34
2023
€’m
350.2
71.0
881.2
51.5
92.8
827.8
1.9
62.5
137.0
2022
€’m 1
2021
€’m 1
341.4
71.6
980.9
36.6
9.2
636.4
1.1
114.0
109.6
329.7
73.8
1,046.1
5.2
8.1
622.2
6.6
104.4
104.4
2,475.9
2,300.8
2,300.5
207.1
100.5
6.8
516.2
830.6
19.3
849.9
163.9
107.6
5.5
426.5
703.5
19.6
723.1
3,325.8
3,023.9
611.8
0.4
(17.8)
—
(7.4)
1,219.2
1,806.2
—
1,806.2
—
646.1
61.9
1.8
161.6
5.8
8.9
34.8
920.9
606.0
0.4
(17.2)
—
0.3
1,113.0
1,702.5
—
1,702.5
—
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
3,653.8
606.0
(0.5)
(23.2)
(3.7)
(22.7)
1,026.5
1,582.4
0.3
1,582.7
167.1
875.0
69.8
2.9
88.9
6.0
13.5
12.8
1,236.0
Playtech plc Annual Report and Financial Statements 2023
163
Financial Statements
Consolidated balance sheet continued
As at 31 December 2023
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
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
29
32
19
25
25
35
31
30
34
26
2023
€’m
—
66.9
24.9
111.0
41.9
14.0
116.1
4.4
0.4
0.6
217.5
597.7
1.0
598.7
1,519.6
3,325.8
2022
€’m 1
2021
€’m 1
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
—
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
3,023.9
3,653.8
The consolidated financial statements were approved by the Board and authorised for issue on 26 March 2024.
Mor Weizer
Chief Executive Officer
Chris McGinnis
Chief Financial Officer
1
Comparative information has been re-stated due to change in accounting policy. Further details are provided in Note 4A.
164 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Consolidated statement of cash flows
For the year ended 31 December 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustments 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
Net loans granted/repaid
Dividend income
Acquisition of subsidiaries/assets under business combinations, net of cash acquired
Acquisition of property, plant and equipment
Acquisition of intangible assets
Capitalised development costs
Acquisition of investment in associates
Acquisition of investments at fair value through profit or loss
Subcontractor option redemption
Proceeds from the sale of property, plant and equipment and intangible assets
Disposal of Financial segment, net of cash disposed
Disposal of subsidiary, net of cash disposed
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid on bonds and loans and borrowings
Repayment of loans and borrowings
Proceeds from loans and borrowings
Proceeds from the issuance of 2023 Bond, net of issue costs
Repayment of 2018 Bonds
Payment of contingent consideration and redemption liability (see below)
Principal paid on lease liability
Interest paid on lease liability
Net cash from/(used in) financing activities
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
Exchange gain/(loss) on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT END OF YEAR
Note
22
21A
21B
21C
29
29
25
2023
€’m
105.1
307.7
(45.9)
366.9
(23.4)
1.5
(3.6)
(57.6)
(35.7)
(56.7)
(9.2)
(94.1)
(41.3)
2.5
—
—
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)
(317.6)
(358.3)
(31.3)
(77.4)
79.9
297.2
(200.0)
(0.2)
(23.1)
(5.2)
39.9
89.2
426.9
0.5
516.6
(36.7)
(166.1)
—
—
(330.0)
(5.9)
(22.5)
(5.7)
(566.9)
(514.3)
942.1
(0.9)
426.9
Playtech plc Annual Report and Financial Statements 2023
165
Note
18
20
19
19
21A
22
21B
18
20
9
21A
21B
21C
22
Financial Statements
Consolidated statement of cash flows continued
For the year ended 31 December 2023
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED FROM
OPERATING ACTIVITIES
Income and expenses not affecting operating cash flows:
Depreciation on property, plant and equipment
Amortisation of intangible assets
Amortisation of right of use assets
Capitalisation of amortisation of right of use assets
Impact on early termination of lease contracts
Share of loss from associates
Impairment and expected credit losses on loans receivable
Impairment of investment
Impairment of other receivables
Reversal of impairment of property, plant and equipment
Impairment of intangible assets
Profit on disposal of Financial segment
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
Changes in equity-settled share-based payment
Movement in contingent consideration and redemption liability
Expected credit loss on cash and cash equivalents
Unrealised exchange gain
(Profit)/loss on disposal of property, plant and equipment and intangible assets
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
2023
€’m
2022
€’m
46.5
126.7
23.3
(1.7)
(0.4)
0.8
2.4
1.3
2.2
—
89.8
—
—
6.6
(153.4)
—
30.9
5.2
(1.9)
130.7
6.3
3.3
—
(2.9)
(1.4)
(47.9)
(0.4)
(1.3)
4.5
(3.3)
2.0
44.1
(4.6)
0.3
307.7
2023
€’m
—
—
0.2
0.2
41.5
109.8
21.5
(1.9)
(0.7)
3.8
1.6
—
—
(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)
(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
166 Playtech plc Annual Report and Financial Statements 2023
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. Playtech plc is managed and controlled in the UK and, as a result, is UK tax resident.
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 26 March 2024.
Details of the Group’s accounting policies are included in Notes 5 and 6.
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 2025 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
31 December
2023
€’m
31 December
2022
€’m
516.2
(152.9)
363.3
426.5
(154.1)
272.4
The increase in adjusted gross cash and cash equivalents from €272.4 million at 31 December 2022 to €363.3 million at 31 December 2023 is
mainly the result of the new €300.0 million bond issued and continued strong performance of the Group throughout the year, partially offset
by the repayment of the €200.0 million 2018 Bond, the acquisition of a small minority interest in Hard Rock (Note 21B) in March 2023 and the
amounts currently in dispute due from Caliplay (Note 7).
The Directors have reviewed liquidity and covenant forecasts for the Group and have also considered sensitivities in respect of potential
downside scenarios, reverse stress tests and the mitigating actions available to management.
The modelling of downside stress test scenarios assessed if there was a significant risk to the Group’s liquidity and covenant compliance
position. This includes risks such as not realising budget/forecasts across certain markets and any potential implications of changes in tax
and other regulations, as well as the remote probability that no further cash is received from Caliplay in respect of the dispute.
In June 2023, the Group successfully issued new €300.0 million senior secured notes at a rate of 5.875% repayable in June 2028 which were
partially used to repay in full the balance of the €200.0 million bond (initial €530.0 million of senior secured notes bond) issued in October 2018.
The Group’s principal financing arrangements as at 31 December 2023 include a revolving credit facility (RCF) up to €277.0 million (which as at
31 December 2023 remains fully undrawn), the 2019 Bond amounting to €350.0 million and the new 2023 Bond amounting to €300.0 million,
which are repayable March 2026 and June 2028 respectively. The RCF, which was restructured in October 2022, has been reduced 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 RCF is subject to certain financial covenants which are tested every six months on a rolling 12-month basis, as set out in Notes 28 and 29.
As at 31 December 2023, 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 2023 (2022: less than 3.5:1).
•
Interest cover: Adjusted EBITDA/Interest to be over 4:1 for the 12 months ended 31 December 2023 (2022: over 4:1).
The Bonds only have one financial covenant, being the Fixed Charge Coverage Ratio (same as the Interest cover ratio for the RCF), which should
equal or be greater than 2:1.
If the Group’s results and cash flows are in line with its base case projections as approved by the Board, it would not be in breach of the financial
covenants for a period of no less than 15 months from approval of these financial statements (the “relevant going concern period”). This period
covers the bank reporting requirements for June 2024, December 2024 and June 2025 and is the main reason why the Directors selected a
15-month period of assessment. Under the base case scenario, the Group would not need to utilise its RCF facility over the going concern period.
Stress test
The stress test assumes a worst-case scenario for the entire Group which includes additional sensitivities around Italy, the Americas and
Asia, but with mitigations available (including salary and capital expenditure reductions) if needed. It also includes the remote probability
that no further cash is received from Caliplay in the going concern period to 30 June 2025. The outstanding amount at 31 December 2023 is
€86.5 million (Note 7), with further invoices totalling €35.8 million in relation to B2B licence fees and additional B2B services fee for January
and February 2024 issued and which remain unpaid (Note 41). Under this scenario, Adjusted EBITDA would fall on average by 31% per month
compared to the base case over the relevant going concern period, but the Group would still comfortably meet its covenants. From a liquidity
perspective the Group still would not need to utilise the RCF.
The Group has also considered any matters outside of the going concern period such as the renewal of the Italian licences which will result in
a material cash outflow. This is currently expected to fall outside of the going concern period; however, should payment be required in the going
concern period or shortly after, this does not give rise to any concerns over liquidity or covenant compliance.
Playtech plc Annual Report and Financial Statements 2023
167
Financial Statements
Notes to the financial statements continued
Note 2 – Basis of preparation continued
Going concern basis continued
Reverse stress test
The reverse stress test was used to identify the reduction in Adjusted EBITDA required that could result in either a liquidity event or breach of the
RCF and bond covenants.
As a result of completing this assessment, without considering further mitigating actions, management considered the likelihood of the reverse
stress test scenario arising to be remote. In reaching this conclusion, management considered the following:
• current trading is performing above the base case;
• Adjusted EBITDA would have to fall by 85% in the year ending 31 December 2024 and 85% in the 12 months to June 2025, compared to the
base case, to cause a breach of covenants; and
•
in the event that revenues decline to this point to drive the decrease in Adjusted EBITDA, additional mitigating actions are available to
management which have not been factored into the reverse stress test scenario.
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 main functional currencies
for subsidiaries includes Euro, United States Dollar and British Pound. All amounts have been rounded to the nearest million, unless
otherwise indicated.
Note 4 – Changes in material accounting policies
A. Deferred tax related to assets and liabilities arising from a single transaction
The Group has adopted Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 effective from
1 January 2023. The amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise to equal and
offsetting temporary differences, e.g. leases and decommissioning liabilities. For leases and decommissioning liabilities, an entity is required to
recognise the associated deferred tax assets and liabilities from the beginning of the earliest comparative period presented, with any cumulative
effect recognised as an adjustment to retained earnings or other components of equity at that date.
Following the change to the initial recognition exemption, the Group has recognised a separate deferred tax asset in relation to its lease liabilities
and a deferred tax liability in relation to its right of use assets.
The table below presents the cumulative effects of the items affected by the initial application on the consolidated balance sheet as at
1 January 2022 and 31 December 2022:
Assets
Deferred tax asset
Equity
Retained earnings
€’m
1.5
1.5
B. Material accounting policy information
The Group also adopted the Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from 1 January 2023.
Although the amendments did not result in any changes to the accounting policies themselves, they impacted the accounting policy information
disclosed in the financial statements.
The amendments require the disclosure of “material”, rather than “significant”, accounting policies. The amendments also provide guidance
on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy
information that users need to understand other information in the financial statements.
Management reviewed the accounting policies and made updates to the information disclosed in Note 6 Material accounting policies
(2022: Significant accounting policies) in certain instances in line with the new amendments.
168 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Note 4 – Changes in material accounting policies continued
C. Reclassification of bank charges in the profit or loss
Effective 1 January 2023, the Group changed its accounting policy to recognise certain costs within distribution costs, previously recognised
within finance costs. Management believes that the classification as distribution costs is more in line with the nature of the cost, being banking
charges relating to players’ transaction processing within the B2C business segment.
Below is a summary of the impact of the change in accounting policy for the previous period:
Year ended 31 December 2022
Distribution costs before depreciation and amortisation
Finance costs
As previously
reported
€’m
1,067.3
73.0
Adjustments
€’m
10.2
(10.2)
As restated
€’m
1,077.5
62.8
Adjusted EBITDA and reported EBITDA for the year ended 31 December 2022 decreased by €10.2 million to €395.4 million and €362.3 million
respectively. There was no impact to the profit before tax.
Note 5 – Accounting standards issued but not yet effective
A number of new standards are effective for annual periods beginning after 1 January 2023 and earlier application is permitted. However, the
Group has not early adopted the following new or amended accounting standards in preparing these consolidated financial statements.
• Amendments to IAS 1 Presentation of Financial Statements: 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.
• Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7
In May 2023, the IASB issued amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to clarify the
characteristics of supplier finance arrangements and require additional disclosure of such arrangements. The disclosure requirements in the
amendments are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s
liabilities, cash flows and exposure to liquidity risk.
Note 6 – Material 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 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 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 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.
Playtech plc Annual Report and Financial Statements 2023
169
Financial Statements
Note 6 – Material accounting policies continued
A. Basis of consolidation continued
(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) 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.
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 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.
170 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 6 – Material accounting policies continued
A. Basis of consolidation continued
(iii) Investments in associates and equity call options continued
A derivative financial asset is measured under fair value per IFRS 9. In the case where there is significant influence over the investment under
which Playtech holds the derivative financial asset, it should be accounted for under IAS 28 Investment in Associate. However, if the option is
not currently exercisable and there is no current access to profits, the option is fair valued without applying equity accounting to the investment
in associate.
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.
(iv) 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 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).
(v) 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 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 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 using the exchange rates at the reporting date and profit or loss items 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.
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.
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Financial Statements
Note 6 – Material accounting policies continued
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).
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 and is net of refunds, concessions and discounts provided to certain licensees. The payment terms of the
B2B licensee fee are on average 30 days from the invoice date.
B2B fixed-fee income
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 revenue recognised by the Group 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 charged 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 are 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 between each licensee
and 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 are 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 are 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 are on average 30 days from the invoice date.
172 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 6 – Material 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; revenues are recognised at the time of the bet.
• The revenues from online gaming (games of skill/casino/bingo) are recognised net of the winnings, jackpots,
bonuses and certain flat-rate gaming tax 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 at the
conclusion of the event.
• Poker revenues in the form of commission (i.e. rake) are 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.
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 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.
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Financial Statements
Note 6 – Material accounting policies continued
F. Income tax continued
(ii) Deferred tax
The Group adopted the amendments to IAS 12 issued in May 2023, which provide a temporary mandatory exception from the requirement
to recognise and disclose deferred taxes arising from enacted tax law that implements the Pillar Two model rules, including tax law that
implements qualified domestic minimum top-up taxes described in those rules. Under these amendments, any Pillar Two taxes incurred by
the Group will be accounted for as current taxes from 1 January 2024.
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 does not give rise to equal
taxable and deductible temporary differences; 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 does not give rise to equal taxable and deductible temporary differences; 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 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 is 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.
174 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 6 – Material 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 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 expenditures, including expenditures on internally generated goodwill and brands, are 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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Note 6 – Material 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 are 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 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.
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.
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.
176 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 6 – Material accounting policies continued
L. Financial instruments continued
(i) Financial assets continued
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 profit
or loss. This category includes listed equity investments which the Group had not irrevocably elected to classify at fair value through OCI.
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.
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, 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 profit or loss.
Playtech plc Annual Report and Financial Statements 2023
177
Financial Statements
Note 6 – Material 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 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. For
goodwill in particular, the Group is required to test annually and also when impairment indicators arise, whether goodwill and indefinite life assets
have suffered any 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.
178 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 6 – Material 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 are 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 an 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.
Playtech plc Annual Report and Financial Statements 2023
179
Financial Statements
Note 6 – Material accounting policies continued
U. Adjusted performance measures (APMs)
In the reporting of financial information, the Directors use various APMs. The Directors use the APMs to understand, manage and evaluate
the business and make operating decisions. These APMs are among the primary factors management uses in planning for and forecasting
future periods.
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.
The following are the definitions and purposes of the APMs used:
Closest equivalent
IFRS measure
Reconciling items to
statutory measure
Definition and purpose
APM
Adjusted
EBITDA and
Adjusted Profit
Operating profit and
Profit before tax
Note 11
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 management regularly
monitors the operating cash conversion to Adjusted EBITDA.
• Material one-off items: these items are excluded to get normalised results
that are distorted by unusual or infrequent 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.
•
Investment/acquisition-related items: these items are excluded as they are
not related to the ordinary activities of the business and therefore are not
considered to be ongoing costs of the operations of the business.
These APMs provide a consistent measure of the performance of the Group
from period to period by removing items that are considered to be either
non-cash, one-off or investment/acquisition related items. This is a key
management incentive metric.
Adjusted gross cash and cash equivalents is defined as the cash and cash
equivalents after deducting the cash balances held on behalf of operators in
respect of operators’ jackpot games and poker and casino operations as well
as client funds with respect to B2C.
Adjusted gross
cash and cash
equivalents
Cash and cash
equivalents
Chief Financial
Officer’s statement
Net debt
None
Chief Financial
Officer’s statement
Net debt is defined as the Adjusted gross cash and cash equivalents after
deducting loans and borrowings and bonds. Used to show level of net debt in
the Group and movement from period to period.
Adjusted net
cash provided
by operating
activities
Net cash provided by
operating activities
Chief Financial
Officer’s statement
Net cash provided by operating activities after adjusting for jackpots and
client funds, professional fees and ADM (Italian regulator) 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 jackpots, security deposits and client funds only
impact the reported operating cash flow and not Adjusted EBITDA, while
professional fees are excluded from Adjusted EBITDA but impact operating
cash flow.
Cash
conversion
Adjusted cash
conversion
None
None
Chief Financial
Officer’s statement
Cash conversion is defined as cash generated from operations as a
percentage of Adjusted EBITDA.
Chief Financial
Officer’s statement
Adjusted cash conversion is defined as Adjusted net cash provided by
operating activities as a percentage of Adjusted EBITDA.
Adjusted EPS
EPS
Note 16
Adjusted
diluted EPS
Diluted EPS
Note 16
Adjusted tax
Tax expense
Note 11
The calculation of Adjusted EPS is based on the Adjusted Profit and weighted
average number of ordinary shares outstanding.
The calculation of Adjusted diluted EPS is based on the Adjusted Profit and
weighted average number of ordinary shares outstanding after adjusting for
the effects of all dilutive potential ordinary shares.
Adjusted tax is defined as the tax charge for the period after deducting tax
charges related to uncertain tax positions relating to prior years, deferred
tax on acquisition and the write down of deferred tax assets in respect of tax
losses arising in prior years. As these items either do not relate to the current
year or are adjusted in arriving at the Adjusted Profit, they distort the effective
tax rate for the period.
180 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 6 – Material accounting policies continued
V. Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist
where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received under it.
Note 7 – 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.
Impact of Caliplay dispute
Background
As per the public announcement released by Playtech on 6 February 2023, the Group, through its subsidiary, PT Services Malta Limited
(“PT Malta”), is seeking a declaration from the English Courts to obtain clarification on a point of disagreement between Tecnologia en
Entretenimiento Caliplay, S.A.P.I. (“Caliplay”) and PT Malta in relation to the Caliente Call Option. The Caliente Call Option is an option held by
Caliplay where, for 45 days after the finalisation of Caliplay’s 2021 accounts, Caliplay could redeem PT Malta’s additional B2B services fee
or (if the Playtech Call Option had been exercised at that time) Caliente would have the option to acquire PT Malta’s 49% stake in Caliplay.
The Group believes the Caliente Call Option has expired and first referred to its expiry having taken place in its interim report for the six-month
period ended 30 June 2022, which was published on 22 September 2022. The Group has not changed its position with regards expiry at both
31 December 2022 and 2023. The matter is still unresolved and it is currently due to be heard in English Court in October 2024.
If the Caliente Call Option was declared as being exercisable and was exercised, this would extinguish the Playtech Call Option and the Playtech
M&A Call Option (refer to Note 21A for details on these option arrangements).
The dispute with Caliplay now also includes a litigation in relation to the B2B licensee fees and additional B2B services fees owed by Caliplay to
Playtech under the terms of the Group’s licence agreement. The dispute relates to amounts that date back to July 2023.
The Group became aware in early October 2023 that, in August 2023, without prior notice, Caliplay commenced proceedings in Mexico against
the Group seeking (amongst other things) to invalidate the licence agreement between Caliplay and PT Malta (and the associated framework
agreement which also includes the Playtech Call Option and the Playtech M&A Call Option). From that point, Caliplay has declined to pay nearly
all monthly sums due under the licence agreement (for B2B licensee fee amounts due from August 2023 and additional B2B services fee
amounts due from July 2023). Those Mexican proceedings have since been withdrawn by Caliplay, having been ordered to do so by the English
Courts, but the amounts due to PT Malta remain unpaid.
PT Malta has therefore amended its case in the English Courts to include a debt claim for monies owed by Caliplay under the licence agreement
for sums due as B2B licensee fees and additional B2B services fees. Caliplay has denied in its defence that these fees are outstanding or
otherwise payable.
As regards the B2B licensee fees, Caliplay has made a counterclaim relating to alleged complaints about the quality of certain software licensed
to it by PT Malta. Caliplay alleges that the difference in value provided to it by the software, as compared with the B2B licensee fees invoiced by
PT Malta, entitles Caliplay to reduce the B2B licensee fees. Caliplay has also claimed that amounts invoiced by PT Malta in respect of the B2B
licensee fees are in excess of those allowed by the contractual terms.
As regards the monthly additional B2B services fees, Caliplay has alleged that on 3 January 2024 it recorded a significant provision for the
months of July to November 2023 and argues that, because of this provision, Caliplay’s profits for Q3 2023 stand to be retrospectively adjusted
downwards to zero, with the effect that all of the additional B2B services fees (which are calculated based on predefined percentage of
revenue generated by Caliplay with a profit-linked cap (as provided for in the agreement)) for Q3 2023 also stand to be retrospectively adjusted
downwards to zero. Caliplay also alleges, as a result of the significant provision, that it does not have sufficient working capital (after taking
account of this provision) to pay these additional B2B services fees.
The monthly additional B2B services fees in respect of Q4 2023 have also not been paid. PT Malta is still to formally amend its claim to include
these amounts and Caliplay has therefore not yet pleaded any defence as to the basis of its non-payment. However, the Group anticipates that
Caliplay will seek to rely on substantially the same bases for non-payment of these fees as are relied upon in respect of Q3 2023.
Impact on revenue recognition and recovery of receivable
At 31 December 2023, the outstanding amount of the B2B licensee fee was €32.3 million and the outstanding amount of the additional B2B
services fee was €54.2 million.
The Group has recognised the full outstanding amount above of €86.5 million within its total revenue for the year and in line with its revenue
accounting policies as per Note 6D. In recognising the entire amount, the Group has assessed that it is highly probable that there will not be a
significant reversal of this revenue in a subsequent period. This was principally supported by the following:
In relation to the monthly B2B licensee fees, the Group believes that Caliplay’s counterclaim is unlikely to succeed and that Caliplay will also not
be entitled to set it off against the B2B licensee fees owed. PT Malta’s legal position is that Caliplay’s interpretation of the licence agreement is
not correct and that Caliplay will not be legally entitled, even if it did have a valid counterclaim, to set it off against the B2B licensee fees owed or
to claim an alleged difference in value between the software provided and the B2B licensee fees invoiced.
Playtech plc Annual Report and Financial Statements 2023
181
Financial Statements
Note 7 – Significant accounting judgements, estimates and assumptions continued
Judgements continued
Impact of Caliplay dispute continued
Impact on revenue recognition and recovery of receivable continued
The Group also does not accept the factual allegations which Caliplay has made about its software, considers that Caliplay’s case does not
accurately reflect the contractual obligations which relate to the Group’s software, and in any event firmly believes that it has met its performance
obligations under the agreement and therefore is entitled to the full revenue. The Group’s software has helped to deliver considerable
year-on-year revenue growth for Caliplay; the Group believes that growth is inconsistent with the allegations which Caliplay is now making about
the quality of software and services delivered.
In relation to the monthly additional B2B services fees, the Group believes that Caliplay is unlikely to convince the English Courts on its
current case that the provision is valid and has any effect on the amounts due to the Group (through PT Malta). This is principally for the
following reasons:
• Caliplay has provided very little information about the basis and nature of the provision, despite requests, and the Group believes that
Caliplay’s pleading is defective.
• There is no contractual mechanism under the licence agreement to retrospectively adjust the additional B2B services fees.
• Caliplay’s case on working capital does not make any reference to the timeframe in which the alleged provision would theoretically be paid,
and therefore based on the information provided this provision has no bearing on any working capital requirements.
The Adjusted EBITDA recorded for the year ended 31 December 2023 is therefore exposed to the outstanding invoices of €86.5 million should
the Group not recover the debt. This is reduced by certain subcontractor payments linked to the revenue recognised which per the agreement
would only be made when the debt is received by the Group.
In addition, there is potentially a risk that if the English Court orders the immediate payment of all outstanding fees, Caliplay may still refuse to
pay under the relevant settlement agreement and/or court order. However, the Group considers that this probability is unlikely based on current
information. Not complying with an English Court order carries significant reputational risks for Caliplay and the potentially adverse impact upon
its external relationships. Furthermore, we are not aware of any current risk of non-compliance. Instead, so far Caliplay has complied with the
two court orders in PT Malta’s favour in relation to the order to withdraw the proceedings in Mexico and not to litigate there further (granted by
Mr Justice Foxton in October 2023 and Mr Justice Bright in December 2023 respectively). In the unlikely event that Caliplay refuses to pay the
Group in circumstances where Playtech has the benefit of an English Court judgement ordering Caliplay to do so, Playtech will take all steps
available to seek immediate enforcement of the order in Mexico by way of recognition of the English judgement under the appropriate bi-lateral
enforcement treaty, and continue to demand the outstanding fees from Caliplay.
Impact on Playtech M&A Call Option valuation
The Playtech M&A Option is further described in Note 21A of the financial statements, with the valuation methodology and assumptions covered
in Note 21C.
The Group’s view of a reasonable market participant base discount rate for the 31 December 2023 valuation is unchanged since last year.
However, due to the ongoing legal proceedings and the disputes with Caliplay, the Group has adjusted the fair value of the Playtech M&A
Call Option to reflect this risk, by including an additional company-specific risk premium in the discount rate, which overall increased it
to 20% (31 December 2022: 16%). The impact of the increase in discount rate is to reduce the fair value of the option from €846.0 million
to €730.2 million.
Furthermore, although we do not believe the significant provision made by Caliplay is valid, were this to be included in the valuation of the
Playtech M&A Call Option as an adjustment to net debt, this would have a material impact on the value of the Playtech M&A Call Option.
Impact on CGU impairment reviews and recoverability of deferred tax assets
Whilst our current contract with Caliplay under which we are entitled to receive our fees (including the B2B licensee fees and the additional
B2B services fees) is expiring in 2034, and this was our base assumption in the CGU impairment reviews and deferred tax asset recoverability
assessment, should there be material changes to the cash flows arising from the contract this could potentially lead to impairments in certain
CGUs of the Group including Casino, Sports B2B, Services, Quickspin and Eyecon (Note 20).
Similarly, this could also affect the recoverability assessment of the deferred tax asset, due to the reduction in profits against which the deferred
tax asset is able to be utilised, as well as impacting the carrying value of the Parent Company investment in subsidiary.
Given the current uncertainty, the Group is not able to materially estimate the effect of this and in any event considers it highly unlikely that there
will be material changes to the cash flows such that the assets referred to above are materially impacted.
Impact on going concern and viability statement assessment
As per the going concern assessment under Note 2, while in the base case cash flow forecasts the Group has assumed full recovery of the
outstanding amounts within the going concern period of assessment, there is a remote risk depending on the progress of the legal dispute that
no cash will be received in the going concern period to 30 June 2025 and hence this was modelled in the stress test scenario.
Even under this scenario the Group still has sufficient headroom on its covenants and liquidity and hence the Directors still have a reasonable
expectation that the Group will continue as a going concern over the relevant going concern period.
This remote scenario was also modelled in the viability assessment which covers a period of three years, with the conclusion being 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 three-year period to
31 December 2026.
182 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 7 – Significant accounting judgements, estimates and assumptions continued
Judgements continued
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 software fees 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.
The Group applied judgement in determining whether price concessions in respect of ongoing negotiations and contract modifications should
be accounted for as variable consideration in revenue. Once there is a valid expectation that the concession of the variable consideration is
highly probable, the Group accounts for it under IFRS 15 paragraph 52.
IFRS 15, paragraph 52 describes that in addition to the terms of the contract, the promised consideration is variable if either of the following
circumstances exists:
• The operator has a valid expectation arising from Playtech’s customary business practices, published policies or specific statements that
Playtech will accept an amount of consideration that is less than the price stated in the contract, that is, it is expected that Playtech will offer a
price concession. Depending on the jurisdiction, industry or customer this offer may be referred to as a discount, rebate, refund or credit.
• Other facts and circumstances indicate that Playtech’s intention, when entering into the contract with the operator, is to offer a price
concession to the operator.
The Group has estimated the variable consideration based on the best estimates of future outcomes to determine the most likely amount of
consideration to be received.
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 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 €56.7 million (2022: €57.5 million) and the carrying amount of capitalised
development costs as at 31 December 2023 was €133.5 million (2022 restated: €128.1 million).
Adjusted performance measures
As noted in Note 6, paragraph U, the Group presents adjusted performance measures which differ from statutory measures due to exclusion of
certain non-cash and one-off items from the actual results. The determination of whether these items should form part of the adjusted results is a
matter of judgement as management assess whether these items meet the definition disclosed in Note 6, paragraph U. The items excluded from
the adjusted measures are described in further detail in Note 11.
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 management
based on the latest information available at the reporting date. See Note 30 for further details.
Playtech plc Annual Report and Financial Statements 2023
183
Financial Statements
Note 7 – Significant accounting judgements, estimates and assumptions continued
Judgements continued
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 that 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:
• B2B licensee fee income (as per Note 6D); and
• revenue based on predefined revenue generated by each customer under each 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 6D).
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.
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 21 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.
184 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 7 – Significant accounting judgements, estimates and assumptions continued
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
Cash-generating units
Impairment exists when the carrying value of an asset or cash-generating unit (CGU) exceeds its recoverable amount, which is the higher of its
fair value less costs to sell and its value in use. The value in use calculation is based on a discounted cash flow model (DCF). The cash flows are
derived from the three-year budget, with CGU-specific assumptions for the subsequent two years. They do not include restructuring activities
that the Group is not yet committed to or significant future investments that may enhance the performance of the assets of the CGU being
tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash inflows and the
growth rates used in years four and five and for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles
with indefinite useful lives recognised by the Group. The key assumptions used to determine the recoverable amount of the different CGUs are
disclosed and further explained in Note 20, including a sensitivity analysis for the CGUs that have lower headroom.
Investment in associates
In assessing impairment of investments in associates, management utilises various assumptions and estimates that include projections of
future cash flows generated by the associate, determination of appropriate discount rates reflecting the risks associated with the investment,
and consideration of market conditions relevant to the investee’s industry. The Group exercises judgement in evaluating impairment indicators
and determining the amount of impairment loss, if any. This involves assessing the recoverable amount of the investment based on available
information and making decisions regarding the appropriateness of key assumptions used in impairment testing.
Income taxes
The Group is subject to income tax in several jurisdictions and significant judgement is required in determining the provision for income taxes.
During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result,
the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised
when, despite the Group’s belief that its tax return positions are supportable, the Group believes it is more likely than not that a taxation authority
would not accept its filing position. In these cases, the Group records its tax balances based on either the most likely amount or the expected
value, which weights multiple potential scenarios. The Group believes that its accruals for tax liabilities are adequate for all open audit years
based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and
assumptions and may involve a series of complex judgements about future events. To the extent that the final tax outcome of these matters
is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.
Where management conclude that it is not probable that the taxation authority will accept an uncertain tax treatment, they calculate the effect
of uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates. The effect of
uncertainty for each uncertain tax treatment is reflected by using the expected value – the sum of the probabilities and the weighted amounts
in a range of possible outcomes. More details are included in Note 15.
Deferred tax asset
In evaluating the Group’s ability to recover our deferred tax assets in the jurisdiction from which they arise, management considers all available
positive and negative evidence, projected future taxable income, tax-planning strategies and results of recent operations. Deferred tax asset
is recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Judgement is required in determining the initial recognition and the subsequent carrying value of the deferred tax asset. Deferred tax asset is
only able to be recognised to the extent that utilisation is considered probable. It is possible that a change in profit forecasts or risk factors could
result in a material change to the income tax expense and deferred tax asset in future periods.
Deferred tax asset in the UK
As a result of the Group’s internal restructuring in January 2021, the Group is entitled to UK tax deductions in respect of certain goodwill and
intangible assets. A deferred tax asset was recognised as the tax base of the goodwill and intangible assets is in excess of the book value
base of those assets. At the beginning of the period, the net recognised deferred tax asset amounted to €56.8 million. As at 31 December 2023,
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. During the year, €14.8 million has been utilised and the net recognised deferred
tax asset as at 31 December 2023 amounts to €47.2 million. In addition, a total of €31.8 million of deferred tax asset has not been recognised in
respect of the benefit of future tax deductions related to the goodwill and intangible assets which will arise more than five years after the balance
sheet date.
Deferred tax assets are reviewed at each reporting date. In considering their recoverability, the Group assesses the likelihood of their being
recovered within a reasonably foreseeable timeframe, which is broadly in line with our viability assessment and the cash flow forecasts period
used in our CGU impairment assessment. The Group updated its forecasts, following changes in assumptions made to the forecasts during
2023, due to certain changes in the current period to the expected profit profile within its UK business unit that carries significant losses.
This forms a change in accounting estimate and resulted in a reversal of €37.2 million in the current year of previously recognised deferred tax
assets in respect of UK tax losses and tax attributes relating to excess interest expense brought forward.
Playtech plc Annual Report and Financial Statements 2023
185
Financial Statements
Note 7 – Significant accounting judgements, estimates and assumptions continued
Estimates and assumptions continued
Deferred tax asset continued
Deferred tax asset in the UK continued
As at 31 December 2023, a deferred tax asset of €27.2 million has been recognised in respect of UK tax losses (2022: €64.4 million). Based on
the current forecasts, these losses will be fully utilised over the forecast period. Remaining UK tax losses and excess interest expense of
€268.3 million (2022: €Nil) have not been recognised as at 31 December 2023 as expected utilisation would fall outside the forecasting period
and therefore there is not sufficient certainty they will be recovered.
Any future changes in the tax law or the structure of the Group could have a significant effect on the use of the tax deductions, including the
period over which the deductions can be utilised.
Deferred tax assets in Italy
The Group has recognised a deferred tax asset of €2.1 million (2022: €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 year.
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.
Impairment of financial assets
The Group undertook a review of trade receivables and other financial assets, as applicable, and their expected credit losses (ECLs). The review
considered the macroeconomic outlook, customer credit quality, exposure at default, and effect of payment deferral options as at the reporting
date. The ECL methodology and definition of default remained consistent with prior periods. The model inputs, including forward-looking
information, scenarios and associated weightings, together with the determination of the staging of exposures, were revised. The Group’s
financial assets consist of trade and loans receivables and cash and cash equivalents. ECL on cash balances was considered and calculated by
reference to Moody’s credit ratings for each financial institution, while ECL on trade and loans receivables was based on past default experience
and an assessment of the future economic environment. More details are included in Note 39.
In respect of the Group’s Asian licensees’ business model an additional ECL risk was identified due to increase in collection days and uncertainty
over timing of receipt of funds. An additional provision was made in the year ended 31 December 2023 of €3.4 million (2022: €15.4 million).
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 includes 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.
186 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 7 – Significant accounting judgements, estimates and assumptions continued
Estimates and assumptions continued
Sun Bingo agreement continued
Judgements made on recognition and measurement continued
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 €58.7 million (2022: €63.4 million) and €4.4 million (2022: €3.6 million) in Notes 22 and 24,
respectively, are the differences 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.
As with any budgeting process, there is always a risk 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 13 years from 31 December 2023. 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 30.
Measurement of fair values of equity investments and equity call options
The Group’s equity investments and, where applicable (based on the judgements applied above), equity call options held by the Group, are
measured at fair value for financial reporting purposes. The Group has an established control framework with respect to the measurement of
fair value.
In estimating the fair value of an asset and liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are
not available, the Group engages third-party qualified valuers to assist in performing the valuation. The Group works closely with the qualified
valuers to establish the appropriate valuation techniques and inputs to the model.
As mentioned in Note 21, 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 values of the equity investments that are not listed, and of the derivative financial assets, rely on non-observable inputs that require
a higher level of management judgement to calculate a fair value than those based wholly on observable inputs. Valuation techniques used to
calculate fair values include comparisons with similar financial instruments for which market observable prices exist, DCF analysis and other
valuation techniques commonly used by market participants. Upon the use of DCF method, the Group assumes that the expected cash flows
are based on the EBITDA.
The Group only uses models with unobservable inputs for the valuation of certain unquoted equity investments. In these cases, estimates are
made to reflect uncertainties in fair values resulting from a lack of market data inputs; for example, as a result of illiquidity in the market. Inputs
into valuations based on unobservable data are inherently uncertain because there is little or no current market data available from which to
determine the level at which an arm’s length transaction would occur under normal business conditions. Unobservable inputs are determined
based on the best information available. Further details on the fair value of assets are disclosed in Note 21.
Playtech plc Annual Report and Financial Statements 2023
187
Financial Statements
Note 7 – Significant accounting judgements, estimates and assumptions continued
Estimates and assumptions continued
Measurement of fair values of equity investments and equity call options continued
The following table shows the carrying amount and fair value of non-current assets, as disclosed in Note 21, including their levels in the fair
value hierarchy.
Carrying amount
Fair value
Non-current assets
Other investments (Note 21B)
Derivative financial assets (Note 21C)
Non-current assets
Other investments (Note 21B)
Derivative financial assets (Note 21C)
2023
€’m
92.8
827.8
920.6
Carrying amount
2022
€’m
9.2
636.4
645.6
Level 1
€’m
15.8
—
15.8
Level 1
€’m
1.4
—
1.4
Level 2
€’m
—
—
—
Fair value
Level 2
€’m
—
—
—
Level 3
€’m
77.0
827.8
904.8
Level 3
€’m
7.8
636.4
644.2
Note 8 – Segment information
The Group’s reportable segments are strategic business units that offer different products and services.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker has been identified as the Board including the Chief Executive Officer and the Chief Financial Officer.
The operating segments identified are:
• B2B: Providing technology to gambling operators globally through a revenue share model and, in certain agreements, taking a higher share in
exchange for additional services;
• B2C – Snaitech: Acting directly as an operator in Italy and generating revenues from online gambling, gaming machines and retail betting;
• B2C – Sun Bingo and Other B2C: Acting directly as an operator in the UK market and generating revenues from online gambling;
• B2C – HAPPYBET: Acting directly as an operator in Germany and Austria and generating revenues from online gambling and retail
betting; and
• Financial – including B2C and B2B CFD (discontinued operations): Online CFDs, broker and trading platform provider, operating a number of
brands across numerous countries. This division was disposed in the year ended 31 December 2022.
The Group-wide profit measure is Adjusted EBITDA (see Note 11).
Year ended
31 December 2023
Revenue
Adjusted EBITDA
Total assets
Total liabilities
Year ended
31 December 2022
Revenue
Adjusted EBITDA
Total assets
Total liabilities
B2B
€’m
Snaitech
€’m
946.6
256.1
1,115.5
469.4
Sun Bingo
and Other
B2C
€’m
73.4
6.0
90.6
26.0
HAPPYBET
€’m
Intercompany
B2C
€’m
Total
B2C
€’m
Intercompany
€’m
Total
€’m
18.2
(11.8)
17.3
5.6
(1.2)
1,037.0
250.3
—
— 1,223.4
501.0
—
(14.4)
1,706.7
432.3
—
— 3,325.8
1,519.6
—
HAPPYBET
€’m
Intercompany
B2C
€’m
Total B2C
€’m
Intercompany
€’m
20.1
(10.8)
9.3
6.4
(2.1)
—
—
—
983.1
235.2
1,169.8
624.2
(13.7)
—
—
—
Total
Gaming –
continuing
operations
€’m
1,601.8
395.4
3,023.9
1,321.4
Financial –
discontinued
operations
€’m
74.5
33.8
—
—
Total
€’m
1,676.3
429.2
3,023.9
1,321.4
684.1
182.0
2,102.4
1,018.6
Sun Bingo
and Other
B2C
€’m
65.3
2.0
89.7
14.6
B2B
€’m
632.4
160.2
1,854.1
697.2
Snaitech
€’m
899.8
244.0
1,070.8
603.2
188 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 8 – 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
2023
€’m
750.3
332.9
54.8
63.9
48.7
27.8
19.4
17.5
17.3
4.0
8.6
7.5
76.6
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
1,429.3
1,510.5
The segment assets and liabilities are not provided to the chief operating decision maker.
Note 9 – Discontinued operations
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
Finance income
Finance costs
Profit on disposal of discontinued operations
Profit before taxation
Tax expense
Profit from discontinued operations, net of tax
2023
2022
Actual
€’m
Adjusted
€’m
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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
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 in July 2022 for a cash consideration of $228.1 million (€223.9 million).
The following table provides 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
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 disposal, 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.
Playtech plc Annual Report and Financial Statements 2023
189
Financial Statements
Note 9 – Discontinued operations continued
Earnings per share from discontinued operations
2023
2022
Basic (cents)
Diluted (cents)
The net cash flows incurred by the Financial segment in the period are as follows:
Actual
Adjusted
—
—
—
—
Operating
Investing
Financing
Net cash inflow
Actual
15.7
15.1
2023
€’m
—
—
—
—
Adjusted
13.7
13.2
2022
€’m
28.2
(3.8)
(1.1)
23.3
The above net cash inflow does not include the disposal proceeds.
Note 10 – Revenue from contracts with customers
The Group has disaggregated revenue into various categories in the following tables which is intended to:
• depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by recognition date; and
• enable users to understand the relationship with revenue segment information provided in the segmental information note.
Revenue analysis by geographical location of licensee, product type and regulated vs unregulated by geographical major markets
The revenues from B2B (consisting of licensee fee, fixed-fee income, revenue received from the sale of hardware, cost-based revenue and
additional B2B services fee) and B2C are described in Note 6D.
Upon signing a software licence agreement with a new licensee, the Group verifies its gambling licence (jurisdiction) and registers it accordingly
to the Group’s database. The table below shows the revenues generated from the jurisdictions of the licensee.
Playtech has disclosed jurisdictions with revenue greater than 10% of the total Group revenue separately and categorised the remaining revenue
by wider jurisdictions, being Rest of Europe, Latin America (LATAM) and Rest of World.
For the year ended 31 December 2023
Primary geographic
markets
Italy
UK
Mexico
Rest of Europe
LATAM
Rest of World
B2B
€’m
36.9
127.0
183.0
232.4
44.8
60.0
684.1
Snaitech
€’m
945.4
—
—
1.2
—
—
946.6
Sun Bingo
and Other
B2C
€’m
—
73.4
—
—
—
—
73.4
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
Total
190 Playtech plc Annual Report and Financial Statements 2023
HAPPYBET
€’m
Intercompany
B2C
€’m
—
—
—
18.2
—
—
18.2
—
—
—
(1.2)
—
—
(1.2)
B2B
€’m
467.2
32.8
57.4
13.8
112.9
684.1
—
—
—
—
—
684.1
Total
B2C
€’m
945.4
73.4
—
18.2
—
—
1,037.0
Intercompany
€’m
(10.6)
(3.8)
—
—
—
—
(14.4)
B2C
€’m
Intercompany
€’m
—
—
—
—
—
—
946.6
73.4
18.2
(1.2)
1,037.0
1,037.0
(12.6)
(0.8)
(1.0)
—
—
(14.4)
—
—
—
—
—
(14.4)
Total
€’m
971.7
196.6
183.0
250.6
44.8
60.0
1,706.7
Total
€’m
454.6
32.0
56.4
13.8
112.9
669.7
946.6
73.4
18.2
(1.2)
1,037.0
1,706.7
Notes to the financial statements continued
Financial Statements
Note 10 – Revenue from contracts with customers continued
Revenue analysis by geographical location of licensee, product type and regulated vs unregulated by geographical major
markets continued
Regulated – Americas
– US and Canada
– Latin America
Regulated – Europe (excluding UK)
Regulated – UK
Regulated – Rest of World
Total regulated B2B revenue
Unregulated
Total B2B revenue
For the year ended 31 December 2022
Primary geographic markets
Italy
UK
Rest of Europe
LATAM
Rest of World
B2B
€’m
35.1
127.0
233.3
160.7
76.3
632.4
Snaitech
€’m
897.7
—
2.1
—
—
899.8
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
Financial
Total
Regulated – Americas
– US and Canada
– Latin America
Regulated – Europe (excluding UK)
Regulated – UK
Regulated – Rest of World
Total regulated B2B revenue
Unregulated
Total B2B revenue
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
—
65.2
0.1
—
—
65.3
—
—
20.1
—
—
20.1
—
—
(2.1)
—
—
(2.1)
897.7
65.2
20.2
—
—
983.1
(10.0)
(3.7)
—
—
—
(13.7)
922.8
188.5
253.5
160.7
76.3
1,601.8
1.3
34.1
10.4
18.6
10.1
74.5
B2B
€’m
451.7
42.1
59.9
13.2
65.5
632.4
—
—
—
—
—
—
632.4
Intercompany
€’m
Total Gaming
– continuing
operations
€’m
Financial
– discontinued
operations
€’m
(12.4)
(0.6)
(0.7)
—
—
(13.7)
—
—
—
—
—
—
439.3
41.5
59.2
13.2
65.5
618.7
899.8
65.3
20.1
(2.1)
983.1
—
(13.7)
1,601.8
—
—
—
—
—
—
—
—
—
—
—
74.5
74.5
B2C
€’m
—
—
—
—
—
—
899.8
65.3
20.1
(2.1)
983.1
—
983.1
2023
€’m
13.2
198.7
200.1
126.1
7.0
545.1
139.0
684.1
Total
€’m
924.1
222.6
263.9
179.3
86.4
1,676.3
Total
€’m
439.3
41.5
59.2
13.2
65.5
618.7
899.8
65.3
20.1
(2.1)
983.1
74.5
1,676.3
2022
€’m
7.6
137.1
184.6
126.7
5.6
461.6
170.8
632.4
Playtech plc Annual Report and Financial Statements 2023
191
Financial Statements
Note 10 – Revenue from contracts with customers continued
Revenue analysis by geographical location of licensee, product type and regulated vs unregulated by geographical major
markets continued
There were no changes in the Group’s revenue measurement policies and procedures in 2023 and 2022. The vast majority of the Group’s B2B
contracts are for the delivery of services within the next 12 months. For the year ended 31 December 2023, Playtech recognised revenue from
a single customer totalling approximately 10.3% of the Group’s total revenue (2022: no single customer accounted for over 10%).
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 2023 was €6.2 million
(2022: €6.0 million).
The movement in contract liabilities during the year was as follows:
Balance at 1 January
Recognised during the year
Realised in profit or loss
Balance at 31 December
Note 11 – Adjusted items
2023
€’m
6.0
8.0
(7.8)
6.2
2022
€’m
8.1
8.4
(10.5)
6.0
Management regularly uses adjusted financial measures internally to understand, manage and evaluate the business and make operating
decisions. These adjusted measures are among the primary factors management uses in planning for and forecasting future periods.
The primary adjusted financial measures are Adjusted EBITDA and Adjusted Profit, which management considers are relevant in understanding
the Group’s financial performance. The definitions of adjusted items and underlying adjusted results are disclosed in Note 6 paragraph U.
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 2023
Reported as actual
Employee stock option expenses1
Professional fees2
Impairment of investment and receivables3
Fair value changes and finance costs on
contingent consideration4
Fair value changes of equity instruments5
Fair value change of derivative financial assets5
Amortisation of intangible assets on acquisitions6
Impairment of intangible assets7
Deferred tax on acquisitions6
Derecognition of brought forward deferred
tax asset8
Tax related to uncertain positions9
Revenue
€’m
1,706.7
—
—
—
—
—
—
—
—
—
—
—
EBITDA –
B2B
€’m
157.9
5.6
13.4
5.1
—
—
—
—
—
—
—
—
EBITDA –
B2C
€’m
248.6
0.7
1.0
—
—
—
—
—
—
—
—
—
Profit
before
tax from
continuing
operations
€’m
235.8
6.3
14.4
5.1
3.3
6.6
(153.4)
42.6
89.8
—
—
—
EBITDA
€’m
406.5
6.3
14.4
5.1
—
—
—
—
—
—
—
—
Adjusted measure
1,706.7
182.0
250.3
432.3
250.5
Profit
from
continuing
operations
attributable
to the
owners
of the
Company
€’m
105.1
6.3
14.4
5.1
3.3
6.6
(153.4)
42.6
89.8
(8.2)
37.2
8.0
156.8
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 acquisition of Hard Rock Digital (Note 21B) and the Caliplay disputes (Note 7). These expenses are not considered ongoing costs of operations
and therefore are excluded.
3 Provision against investments and other receivables that do not relate to the ordinary operations of the Group.
4
Fair value change and finance costs on contingent consideration mostly related to the acquisition of AUS GMTC. These expenses are not considered ongoing costs of operations and therefore
are excluded.
5 Fair value changes of equity instruments and derivative financial assets. These are excluded from the results as they relate to unrealised profit/loss.
6
7
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.
Impairment of intangible assets mainly relates to the impairment of Eyecon €7.8 million, Quickspin €9.6 million and Sports B2B €72.2 million. Refer to Note 20.
The reported tax expense has been adjusted for the derecognition of a deferred tax asset of €37.2 million relating to UK tax losses. This was adjusted because the losses in relation to the
derecognised amount were generated over a number of years and therefore distorts the effective tax rate for the year. Refer to Notes 7, 15 and 33.
9 Change in estimates related to uncertain overseas tax positions in respect of prior years which have now been settled with the relevant tax authority.
192 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 11 – Adjusted items continued
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 changes of equity instruments6
Fair value changes of derivative financial assets6
Fair value loss on convertible loans7
Amortisation of intangible assets on acquisitions8
Impairment of property, plant and equipment 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
138.4
7.1
15.7
(4.3)
3.3
—
—
—
—
—
—
—
—
—
EBITDA –
B2C
€’m
223.9
0.9
—
—
—
10.4
—
—
—
—
—
—
—
—
EBITDA
€’m
362.3
8.0
15.7
(4.3)
3.3
10.4
—
—
—
—
—
—
—
—
Adjusted measure
1,601.8
160.2
235.2
395.4
Profit
from
continuing
operations
attributable
to the
owners
of the
Company
€’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
160.5
Profit
before
tax from
continuing
operations
€’m
95.6
8.0
15.7
(4.2)
3.3
10.4
0.3
(6.0)
3.0
42.0
38.5
8.8
—
—
215.4
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 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 changes 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 21B.
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 property, plant and equipment 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.
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 21A.
11 Change in estimates related to uncertain overseas tax positions in respect of prior years.
The following table provides a full reconciliation between adjusted and actual tax from continuing operations:
Tax on profit or loss for the year
Adjusted for:
Deferred tax on intangible assets on acquisitions
Derecognition of brought forward deferred tax asset
Tax related to uncertain positions
Adjusted tax
Note 12 – 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
2023
€’m
130.7
8.2
(37.2)
(8.0)
93.7
2023
€’m
3.0
1.4
0.2
4.6
0.9
0.9
2022
€’m
55.0
8.3
—
(8.4)
54.9
2022
€’m
2.3
1.4
0.3
4.0
0.9
0.9
Playtech plc Annual Report and Financial Statements 2023
193
Financial Statements
Note 13 – Impairment of property, plant and equipment and intangible assets
Reversal of impairment of property, plant and equipment (Note 18)
Impairment of intangible assets (Note 20)
2023
€’m
—
89.8
89.8
Impairment of intangible assets for 2023 mainly relates to the impairment of Eyecon €7.8 million, Quickspin €9.6 million and Sports B2B
€72.2 million. Refer to Note 20.
Impairment of intangible 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.
Note 14 – Finance income and costs
A. Finance income
Interest income
Dividend income
Net foreign exchange gain
B. Finance costs
Interest on bonds
Interest on lease liability
Interest on loans and borrowings and other
Bank facility fees
Bank charges
Movement in contingent consideration
Fair value loss on convertible loans
Expected credit loss on loans receivable
Net finance costs
Note 15 – Tax expense
Current tax expense
Income tax expense for the current year
Income tax relating to prior years1
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
Total tax expense from continuing operations
1 The majority of this relates to charges arising from the change in estimate of income tax in relation to prior years.
194 Playtech plc Annual Report and Financial Statements 2023
2023
€’m
10.0
0.1
2.2
12.3
2023
€’m
(29.5)
(5.2)
(2.2)
(2.3)
(2.8)
(3.3)
—
(0.9)
(46.2)
(33.9)
2023
€’m
26.4
16.1
0.8
43.3
85.4
1.8
0.2
87.4
130.7
2022
€’m
(0.2)
38.7
38.5
2022
€’m
2.4
—
9.2
11.6
2022
€’m
(35.7)
(5.5)
(6.0)
(7.0)
(3.9)
(0.1)
(3.0)
(1.6)
(62.8)
(51.2)
2022
€’m
19.3
9.1
0.3
28.7
23.5
8.1
(5.3)
26.3
55.0
Notes to the financial statements continued
Financial Statements
Note 15 – Tax expense continued
A reconciliation of the reported income tax charge of €130.7 million (2022: €55.0 million) applicable to profit before tax of €235.8 million
(2022: €95.6 million) at the UK statutory income tax rate of 23.5% is as follows:
Profit for the year
Income tax expense
Profit before income tax
Tax using the Company’s domestic tax rate (23.5% in 2023 and 19% in 2022)
Tax effect of:
Non-taxable fair value movements on call options
Tax exempt income
Non-deductible expenses
Deferred tax asset in respect of Group restructuring
Difference in tax rates applied in overseas jurisdictions
Impact of changes in tax rates
Increase in unrecognised tax losses
Write-down of previously recognised deferred tax assets
Adjustment in respect of previous years:
– Deferred tax
– Income tax
Total tax expense
2023
€’m
105.1
130.7
235.8
55.4
(36.1)
—
35.6
(5.2)
1.2
0.2
24.5
37.2
1.8
16.1
130.7
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
Reported tax charge
A reported tax charge of €130.7 million from continuing operations arises on a profit before income tax of €235.8 million compared to an
expected charge of €55.4 million (2022: a tax charge of €55.0 million on profit before income tax of €95.6 million). The reported tax expense
includes adjustments in respect of prior years relating to current tax and deferred tax of €17.9 million. The prior year adjustment in respect of
current tax of €16.1 million includes an additional provision of €5.6 million relating to uncertain overseas tax positions in respect of prior years
which have now been settled with the tax authorities.
The Group’s effective tax rate for the current period is 55.4%. 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.
• The write-down of a deferred tax asset of €37.2 million in respect of UK tax attributes. Further details of this write-down are included in Note 7.
• Current year tax losses and excess interest not recognised for deferred tax purposes. The tax losses and excess interest mainly relate to the
UK Group companies and amount to €108.3 million.
• Expenses not deductible for tax purposes including professional fees and impairment of intangible assets.
Changes in tax rates and factors affecting the future tax charge
The most significant elements of the Group’s income arise in the UK where the tax rate for the current period is 23.5%. Legislation was enacted in
the UK which increased the standard rate of UK corporation tax from 19% to 25% from 1 April 2023. Deferred tax balances have been calculated
using the tax rates upon which the balance is expected to unwind.
The Group adopted the amendments to IAS 12 issued in May 2023, which provide a temporary mandatory exception from the requirement
to recognise and disclose deferred taxes arising from enacted tax law that implements the Pillar Two model rules, including tax law that
implements qualified domestic minimum top-up taxes described in those rules. Under these amendments, any Pillar Two taxes incurred by the
Group will be accounted for as current taxes from 1 January 2024. Based on an initial analysis of the current year financial data, most territories
in which the Group operates are expected to qualify for one of the safe harbour exemptions such that top-up taxes should not apply. In territories
where this is not the case, there is the potential for Pillar Two taxes to apply; however, based on an initial assessment these are not expected
to be significant. The Group continues to refine this assessment and analyse the future consequences of these rules and, in particular, in relation
to the fair value movements as to how future fair value movements, should these arise, may impact the tax charge.
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.
Playtech plc Annual Report and Financial Statements 2023
195
Financial Statements
Note 16 – 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.
2023
2022
Profit attributable to the 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
105.1
34.7
33.7
2023
Actual
€’m
105.1
34.7
33.7
Adjusted
€’m
156.8
51.7
50.2
Adjusted
€’m
156.8
51.7
50.2
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
2023
2022
Actual
Number
Adjusted
Number
Actual
Number
Adjusted
Number
303,279,998 303,279,998
300,059,994
300,059,994
303,279,998 303,279,998
8,647,771
8,647,771
300,059,994
11,792,385
300,059,994
11,792,385
311,927,769
311,927,769
311,852,379
311,852,379
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 9.
Note 17 – 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
2023
€’m
438.2
0.2
6.3
444.7
6,868
582
7,450
2022
€’m
427.0
(0.3)
8.3
435.0
6,269
538
6,807
The Group has the following employee share option plans (ESOP) for the granting of non-transferable options to certain employees:
• the Long Term Incentive Plan 2012 (LTIP). Awards (options, conditional share 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.
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.
196 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 17 – Employee benefits continued
During 2023 the Group granted 3,023,945 nil cost options under its LTIP22 which are 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 £3.84 and £5.85. Inputs used were
as follows:
Expected life (years)
3
Share price at
grant date
Dividend
yield
Risk-free rate
Projection
period
(years)
Volatility
£5.85
Nil
3.78%
3
36%-46%
During 2022 the Group granted 492,765 nil cost options under its LTIP22 which are 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
Dividend
yield
Risk-free rate
Projection
period
(years)
Volatility
£4.58
Nil
2.34%
3
41%-49%
At 31 December 2023 and 2022 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 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 vested between 1 March 2023 and 26 October 2023 at nil cost
Shares will vest by 18 August 2025 at nil cost
Shares will vest by 5 May 2026 at nil cost
2023
Number
72,596
12,411
21,820
23,344
9,779
77,326
612,618
1,260,489
1,400,000
3,323,693
351,724
3,012,659
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
—
10,178,459
12,172,864
The total number of shares exercisable as of 31 December 2023 is 6,114,076 (2022: 4,729,067).
The total number of outstanding shares that will be cash settled is 570,545 (2022: 561,385). The total liability outstanding for the cash-settled
options is €2.2 million (2022: €3.1 million).
The following table illustrates the number and weighted average exercise prices of share options for the ESOP.
2022
Number
of options
2023
Number
of options
2023
Weighted average
exercise price
2022
Weighted average
exercise price
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Outstanding at the end of the year
12,172,864
3,023,945
(1,137,717)
(3,880,633)
13,882,774
492,765
(408,237)
(1,794,438)
10,178,459
12,172,864
—
—
—
—
—
—
—
—
—
—
Included in the number of options exercised during the year are 176,142 options (2022: 50,448) which were cash settled.
The weighted average share price at the date of exercise of options was £5.39 (2022: £5.30).
Playtech plc Annual Report and Financial Statements 2023
197
Financial Statements
Note 17 – Employee benefits continued
Share options outstanding at the end of the year have the following exercise prices:
Expiry date
Exercise price
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2023
Number
85,007
54,943
77,326
609,607
2,663,500
3,323,693
351,724
3,012,659
2022
Number
93,486
70,620
98,444
1,044,771
4,121,746
6,392,073
351,724
—
10,178,459
12,172,864
Computer
software
and hardware
€’m
Gaming
machines
€’m
Office furniture
and equipment
€’m
Buildings,
leasehold
buildings and
improvements
€’m
142.5
19.5
—
(6.2)
—
(2.4)
153.4
104.1
17.5
(6.1)
—
(1.4)
114.1
39.3
38.4
115.2
23.1
0.1
(2.8)
1.9
—
137.5
78.0
16.1
(2.6)
1.9
—
93.4
44.1
37.2
49.0
6.2
0.1
(1.1)
(1.9)
(0.9)
51.4
28.2
6.1
(0.7)
(1.9)
(0.4)
31.3
20.1
20.8
274.4
8.8
—
(3.8)
—
(0.7)
278.7
29.4
6.8
(3.6)
—
(0.6)
32.0
246.7
245.0
Total
€’m
581.1
57.6
0.2
(13.9)
—
(4.0)
621.0
239.7
46.5
(13.0)
—
(2.4)
270.8
350.2
341.4
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
5 May 2033
Note 18 – Property, plant and equipment
Cost
At 1 January 2023
Additions
Acquisitions through business combinations
Disposals
Reclassifications
Foreign exchange movement
At 31 December 2023
Accumulated depreciation and impairment losses
At 1 January 2023
Charge
Disposals
Reclassifications
Foreign exchange movement
At 31 December 2023
Net book value
At 31 December 2023
At 1 January 2023
198 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 18 – Property, plant and equipment continued
Cost
At 1 January 2022
Prior year adjustment
Adjusted balance at 1 January 20221
Additions
Disposals
Reclassifications
At 31 December 2022
Accumulated depreciation and impairment losses
At 1 January 2022
Prior year adjustment
Adjusted balance at 1 January 20221
Charge
Impairment loss
Disposals
At 31 December 2022
Net book value
At 31 December 2022
At 1 January 20221
Computer
software
and hardware
€’m
Gaming
machines
€’m
Office furniture
and equipment
€’m
Buildings,
leasehold
buildings and
improvements
€’m
132.1
(2.8)
129.3
19.8
(6.3)
(0.3)
142.5
95.3
(1.1)
94.2
16.0
—
(6.1)
104.1
38.4
35.1
96.2
5.5
101.7
15.8
(2.3)
—
115.2
61.4
4.1
65.5
14.5
—
(2.0)
78.0
37.2
36.2
41.1
1.1
42.2
8.8
(2.0)
—
49.0
24.5
0.4
24.9
5.4
(0.2)
(1.9)
28.2
20.8
17.3
270.1
(1.4)
268.7
9.2
(3.8)
0.3
274.4
28.6
(1.0)
27.6
5.6
—
(3.8)
29.4
245.0
241.1
Total
€’m
539.5
2.4
541.9
53.6
(14.4)
—
581.1
209.8
2.4
212.2
41.5
(0.2)
(13.8)
239.7
341.4
329.7
1
The comparative opening cost and accumulated depreciation at 1 January 2022 on each class of property, plant and equipment were restated to correct legacy classification errors. The overall
correction resulted in a total increase in the opening cost of property, plant and equipment of €2.4 million, with the same increase in total accumulated depreciation on 1 January 2022. There was
no impact to the total net book value of the property, plant and equipment both at 1 January 2022 and 31 December 2022.
Playtech plc Annual Report and Financial Statements 2023
199
Financial Statements
Note 19 – Leases
Set out below are the carrying amounts of right of use assets recognised and the movements during the year:
Office leases
€’m
Hosting
€’m
Machinery rentals
€’m
60.5
14.2
1.9
(15.1)
(1.6)
59.9
11.1
6.8
—
(7.8)
—
10.1
—
1.4
—
(0.4)
—
1.0
Office leases
€’m
Hosting
€’m
Total
€’m
71.6
22.4
1.9
(23.3)
(1.6)
71.0
Total
€’m
73.8
19.5
(0.2)
(21.5)
71.6
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
67.8
7.4
(0.2)
(14.5)
60.5
6.0
12.1
—
(7.0)
11.1
2023
€’m
85.8
22.0
1.9
—
5.2
(28.3)
0.2
86.8
24.9
61.9
86.8
2023
€’m
23.3
5.2
(0.4)
—
28.1
At 1 January 2023
Additions/modifications
On business combinations
Amortisation charge
Foreign exchange movement
At 31 December 2023
At 1 January 2022
Additions/modifications
Disposal of subsidiary
Amortisation charge
At 31 December 2022
Set out below are the carrying amounts of lease liabilities and the movements during the year:
At 1 January
Additions/modifications
On business combinations
Disposal of subsidiary
Accretion of interest
Payments
Foreign exchange movement
At 31 December
Current
Non-current
The maturity analysis of lease liabilities is disclosed in Note 39B.
The following are the amounts recognised in 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)
200 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 20 – Intangible assets
Cost
At 1 January 2023
Additions
Assets acquired through business combinations1
Disposal
Foreign exchange movement
At 31 December 2023
Accumulated amortisation and
impairment losses
At 1 January 2023
Charge
Impairment loss
Disposals
Foreign exchange movement
At 31 December 2023
Net book value
At 31 December 2023
At 1 January 2023
Cost
At 1 January 2022
Prior year adjustment2
Adjusted balance 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
Prior year adjustment2
Adjusted balance 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 20222
Patents, domain
names and licence
€’m
Technology IP
€’m
Development
costs
€’m
Customer
list and affiliates
€’m
Goodwill
€’m
Total
€’m
222.4
51.0
0.4
(0.2)
(0.4)
273.2
133.8
43.5
0.4
—
(0.4)
177.3
95.9
88.6
79.7
—
—
—
—
79.7
72.4
3.0
—
—
—
75.4
4.3
7.3
428.4
58.4
—
(3.4)
—
483.4
300.3
49.4
3.6
(3.4)
—
349.9
133.5
128.1
523.5
—
3.0
—
—
526.5
376.4
30.8
0.8
—
—
408.0
118.5
147.1
Patents, domain
names and licence
€’m
Technology IP
€’m
Development
costs
€’m
Customer
list and affiliates
€’m
191.4
(1.2)
190.2
32.2
—
—
—
222.4
110.6
(1.1)
109.5
24.3
—
—
—
133.8
88.6
80.7
86.5
(4.9)
81.6
—
2.9
(3.0)
(1.8)
79.7
72.7
(0.5)
72.2
2.9
—
(0.9)
(1.8)
72.4
7.3
9.4
363.6
11.1
374.7
59.4
—
(1.4)
(4.3)
428.4
241.3
6.2
247.5
49.7
7.0
—
(3.9)
300.3
128.1
127.2
526.9
(2.9)
524.0
—
—
(0.5)
—
523.5
346.2
(2.5)
343.7
32.9
—
(0.2)
—
376.4
147.1
180.3
676.6
—
4.2
(0.4)
—
1,930.6
109.4
7.6
(4.0)
(0.4)
680.4
2,043.2
66.8
—
85.0
(0.4)
—
151.4
529.0
609.8
Goodwill
€’m
773.6
(90.0)
683.6
—
5.4
(12.4)
—
676.6
125.1
(90.0)
35.1
—
31.7
—
—
66.8
609.8
648.5
949.7
126.7
89.8
(3.8)
(0.4)
1,162.0
881.2
980.9
Total
€’m
1,942.0
(87.9)
1,854.1
91.6
8.3
(17.3)
(6.1)
1,930.6
895.9
(87.9)
808.0
109.8
38.7
(1.1)
(5.7)
949.7
980.9
1,046.1
1
2
During the year, the Group acquired the Giove group for a total consideration of €6.0 million. As a result of this transaction, the Group recognised €7.3 million as the fair value of the intangible assets,
of which €3.9 million is goodwill.
The comparative opening cost and accumulated amortisation at 1 January 2022 on each class of intangible assets were restated to correct legacy errors principally arising on disposal of the
Financials CGU, when it was reclassified as held for sale in the year ended 31 December 2020. There was no impact to the net book value of the intangible assets both at 1 January 2022 and
31 December 2022.
Playtech plc Annual Report and Financial Statements 2023
201
Financial Statements
Note 20 – Intangible assets continued
During the year, the research and development costs net of capitalised development costs were €101.2 million (2022: €88.3 million). The internal
capitalisation for the year was €56.7 million (2022: €57.5 million).
Out of the total amortisation charge of €126.7 million (2022: €109.8 million), an amount of €42.6 million (2022: €42.0 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
13 cash-generating units (CGUs) (2022: 13).
The allocation of the goodwill to CGUs is as follows:
Snai
AUS GMTC
Bingo retail
Casino
Poker
Eyecon
Quickspin
Sports B2B
VB retail
Services
Sports B2C
2023
€’m
263.4
4.4
9.5
50.8
15.6
—
10.2
60.3
4.6
109.9
0.3
529.0
2022
€’m
259.7
4.4
9.5
50.8
15.6
3.0
19.8
132.5
4.6
109.9
—
609.8
Management reviews CGUs for impairment bi-annually with a detailed assessment of each CGU carried out annually and whenever there is
an indication that a unit may be impaired. During the annual detailed review, the recoverable amount of each CGU is determined from value in
use calculations based on cash flow projections covering five years (using the Board approved three year plan along with a remaining two-year
forecasted period) plus a terminal value which have been adjusted to take into account each CGU’s major events as expected in future periods.
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 used the Group’s three-year plan, however extended
it to five years and 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 2.0%. 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.
2023 CGUs not sensitive to changes in assumptions:
Snai
AUS GMTC
Bingo retail
Casino
Poker
2022 CGUs not sensitive to changes in assumptions:
Snai
Services
Casino
Poker
VB retail
Average revenue
growth rate
2024-2028
3.1%
15.8%
4.9%
4.7%
4.0%
Average revenue
growth rate
2023-2027
9.4%
22.2%
5.5%
6.2%
10.0%
Discount
rate applied
15.2%
13.1%
13.8%
13.1%
14.9%
Discount
rate applied
17.3%
16.2%
13.9%
17.4%
12.4%
In relation to the Eyecon, Quickspin and Sports B2B CGUs, following impairment tests completed as at 31 December 2023, 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.
202 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 20 – Intangible assets continued
Eyecon CGU
The Eyecon CGU underperformed in 2022, mainly due to the fact that its operations are highly concentrated in the UK online market which has
seen a slowdown due to the uncertain regulatory climate, with an impairment loss of €13.6 million recognised in the year ended 31 December 2022.
Even though the unit is making considerable efforts to expand to new markets, this has yet to take effect. As a result, it continues to see declining
revenues and has been unable to meet budgets set, which led to a further impairment of €7.8 million recognised in the current year, which
impairs the assets down to the recoverable amount. The impairment is writing down €3.0 million of goodwill, €0.4 million of brands, €0.8 million
of customer lists and €3.6 million of development costs. The recoverable amount of this CGU of €9.7 million, with a carrying value equal to
€17.5 million (pre-impairment) at 31 December 2023, was determined using a cash flow forecast that includes annual revenue growth rates
between 2.0% and 11.0% over the one to five-year forecast period (2022: annual revenue growth rates between 0% and 10.0%), 2.0% long-term
growth rate (2022: 2.0% long-term growth rate) and a post-tax discount rate of 15.1% (2022: post-tax discount rate of 15.6%). Following the
impairment posted, all assets have been impaired down to the recoverable amount.
Quickspin CGU
The recoverable amount of the Quickspin CGU was impaired in 2022 by €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 overall decrease in
the CGU performance which went through organisational updates. The unit is still going through a transitional period and has seen a decline in
revenue in the last three years, which led to an additional €9.6 million impairment being recognised in the current year. The recoverable amount
of this CGU of €32.1 million, with a carrying value of €41.7 million (pre-impairment) at 31 December 2023, has been determined using a cash flow
forecast that includes annual revenue growth rates between 5.0% and 7.2% over the one to five-year forecast period (2022: annual revenue
growth rates between 5.0% and 15.1%), 2.0% long-term growth rate (2022: 2.0% long-term growth rate) and a post-tax discount rate of 12.4%
(2022: post-tax discount rate of 12.1%).
If the revenue growth rate per annum is lower by 1%, then an additional impairment of €6.2 million would be recognised. Similarly, if the discount
rate increases by 1.0% to a post-tax discount rate of 13.4%, this would result in a further impairment of €2.9 million.
Sports B2B CGU
The recoverable amount of the Sports B2B CGU, with a carrying value of €236.2 million, has been determined using a cash flow forecast
that includes annual revenue growth rates ranging from a decline of 20.0% to an increase of 15.0%, over the one to five-year forecast period
(2022: annual revenue growth rates between negative 6.1% and 20.0% positive), a 2.0% long-term growth rate (2022: 2.0% long-term growth
rate) and a post-tax discount rate of 13.7% (2022: post-tax discount rate of 14.9%). As a result of two major retail licensees terminating their
contracts during the current year, the recoverable amount of €164.0 million does not exceed the carrying value as stated above (pre-impairment)
and therefore an impairment loss of €72.2 million was recognised in the year ended 31 December 2023.
If the revenue growth rate per annum is lower by 1.0%, then an additional impairment of €20.2 million would be recognised. Similarly, if the
discount rate increases by 1.0% to a post-tax discount rate of 14.7%, this would result in a further impairment of €16.4 million.
Bingo VF CGU
The recoverable amount of the Bingo VF CGU was impaired by €12.5 million during the year ended 31 December 2022 as a result of a contract
termination with a significant licensee and also the decrease in the CGU’s performance. Since last year the CGU has started to generate organic
growth by expanding into new geographies. No further impairment has been recognised in the current year. The recoverable amount of the
CGU of €12.9 million, with a carrying value of €12.6 million, has been determined using a cash flow forecast that includes annual revenue growth
rates between 9.0% and 10.0% over the one to five-year forecast period (2022: annual revenue growth rates between negative 1.0% and positive
10.0%), a 2.0% long-term growth rate (2022: 2.0% long-term growth rate) and a post-tax discount rate of 15.1% (2022: post-tax discount rate of
15.8%). The recoverable amount would equal the carrying value of the CGU if:
• the discount rate applied reached a post-tax discount rate of 15.4%. If the discount rate increases by 1.0% to a post-tax discount rate of 16.1%,
this would result in an impairment of €0.9 million; or
• the revenue growth was lower by 0.1% when compared to the forecasted average five-year growth. If the revenue growth was lower by 1.0%
when compared to the forecasted average five-year growth, this would cause an impairment of €4.1 million.
VB Retail CGU
The recoverable amount of the VB Retail CGU showed signs of underperformance during H1 2023, mainly due to the cancellation of an
important licensee deal that had been expected to launch in early 2023. Given that new opportunities are arising through the US business,
no impairment has been recognised as at 31 December 2023. The recoverable amount of this CGU of €31.9 million, with a carrying value of
€25.2 million at 31 December 2023, has been determined using a cash flow forecast that includes annual revenue growth rates between 8.0%
and 13.0% over the one to five-year forecast period (2022: annual revenue growth rates between 8.0% and 18.0%), 2.0% long-term growth rate
(2022: 2.0% long-term growth rate) and a post-tax discount rate of 12.7% (2022: post-tax discount rate of 12.4%). The recoverable amount would
equal the carrying value of the CGU if:
• the discount rate applied was higher by 20.7%, i.e. reaching a post-tax discount rate of 15.3%; or
• the revenue growth was lower by 2.2% when compared to the forecasted average five-year growth.
Playtech plc Annual Report and Financial Statements 2023
203
Financial Statements
Note 20 – Intangible assets continued
Services CGU
The recoverable amount of the Services CGU, with a carrying value of €283.9 million, which has not been impaired, has been determined using
a cash flow forecast that includes annual revenue growth rates ranging from negative 7.0% and positive 6.2% over the one to five-year forecast
period (2022: annual revenue growth rates between 5.0% and 38.0%), a 2.0% long-term growth rate (2022: 2.0% long-term growth rate) and
a post-tax discount rate of 18.3% (2022: post-tax discount rate of 16.2%).
The recoverable amount would equal the carrying value of the CGU if:
• the discount rate applied was higher by 41.4%, i.e. reaching a post-tax discount rate of 25.9%; or
• the revenue growth was lower by 4.5% when compared to the forecasted average five-year growth.
General
Whilst our current contract with Caliplay under which we are entitled to receive our fees (including the B2B licensee fees and the additional
B2B services fees) is expiring in 2034, and this was our base assumption in our CGU impairment reviews, should there be material changes to
the cash flows arising from the contract this could potentially lead to impairments in certain CGUs of the Group including Casino, Sports B2B,
Services, Quickspin and Eyecon. However, given the headroom in the Casino CGU and relatively low levels of goodwill, there would need to
be a number of other factors impacting the CGU before an impairment is apparent, and hence it is not considered sensitive and the additional
disclosures given for the other more sensitive CGUs are not required for this CGU.
Note 21 – Investments and derivative financial assets
Introduction
Below is a breakdown of the relevant assets at 31 December 2023 and 2022 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 and equity investments held in non-Euro functional
currency subsidiaries
2023
€’m
51.5
92.8
827.8
972.1
2023
€’m
(0.8)
(6.6)
153.4
(5.9)
140.1
2022
€’m
36.6
9.2
636.4
682.2
2022
€’m
(3.8)
(0.3)
6.0
6.8
8.7
Where the underlying derivative call option and equity investments are held in a non-Euro functional currency entity, the foreign exchange
movement is recorded through other comprehensive income. As at 31 December 2023, the foreign exchange movement of the derivative call
options held in Caliplay, LSports and NorthStar (Note 21C) is recorded in profit or loss as these options are held in Euro functional currency
entities. The foreign exchange movement of the derivative call options held in Wplay, Onjoc and Tenbet and the small minority equity investment
in Hard Rock Digital are recorded through other comprehensive income as these are held in USD functional currency entities.
The recognition and valuation methodologies for each category are explained in each of the relevant sections below, including key judgements
made under each arrangement as described in Note 7.
204 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 21 – Investments and derivative financial assets continued
A. Investments in associates
Balance sheet
Caliplay
ALFEA SPA
Galera
LSports
Stats International
NorthStar
Sporting News Holdings Limited
Total investment in equity accounted associates
Profit and loss impact
Share of profit in ALFEA SPA
Share of loss in Galera
Share of profit/(loss) in LSports
Share of loss in NorthStar
Share of loss in Sporting News Holdings Limited
Total profit and loss impact
Movement on the balance sheet
Balance as at 31 December 2022/1 January 2023
Additions
Conversion of convertible loan to shares
Share of profit/(loss)
Dividend income
Balance as at 31 December 2023
2023
€’m
—
1.7
—
35.2
—
9.0
5.6
51.5
2023
€’m
0.1
—
2.1
(2.8)
(0.2)
(0.8)
Sporting
News
Holdings
Limited
€’m
—
5.8
—
(0.2)
—
5.6
2022
€’m
—
1.7
—
34.9
—
—
—
36.6
2022
€’m
0.1
(3.6)
(0.3)
—
—
(3.8)
Total
€’m
36.6
9.2
8.4
(0.8)
(1.9)
51.5
ALFEA SPA
€’m
LSports
€’m
NorthStar
€’m
1.7
—
—
0.1
(0.1)
1.7
34.9
—
—
2.1
(1.8)
35.2
—
3.4
8.4
(2.8)
—
9.0
Caliplay
Background
During 2014, the Group entered into an agreement with Turística Akalli, S. A. de C.V, which has since changed its name to Corporacion Caliente
S.A. de C.V. (“Caliente”), the majority owner of Tecnologia en Entretenimiento Caliplay, S.A.P.I. de C.V (“Caliplay”), which is a leading online betting
and gaming operator in Mexico which operates the “Caliente” brand in Mexico.
The Group made a €16.8 million loan to September Holdings B.V. (previously the 49% shareholder of Caliplay), a company which is 100% owned
by Caliente, in return for a call option that would grant the Group the right to acquire 49% of the economic interest of Caliplay for a nominal
amount (the “Playtech Call Option”).
During 2021, Caliplay redeemed its share at par from September Holdings, which resulted in Caliente owning substantially all of the shares in
Caliplay. The terms of the existing structured agreement were varied, with the following key changes:
• A new additional option (in addition to the Playtech Call Option) was granted to the Group which allowed the Group to take up to a 49%
equity interest in a new acquisition vehicle should Caliplay be subject to a corporate transaction – this additional option is only exercisable in
connection with a corporate transaction and therefore was not exercisable at 31 December 2023 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 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 10). If either the Playtech Call Option
or the Playtech M&A Call Option is exercised, the Group would no longer be entitled to receive the additional B2B services fee (and will
cease to provide certain related services) which for the year ended 31 December 2023 was €111.7 million (2022: €66.3 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”).
Playtech plc Annual Report and Financial Statements 2023
205
Financial Statements
Note 21 – Investments and derivative financial assets continued
A. Investments in associates continued
Caliplay continued
Background continued
As per the public announcement made by the Group on 6 February 2023, the Group is seeking a declaration from the English Courts to obtain
clarification on a point of disagreement between the parties in relation to the Caliente Call Option. The Group believes the Caliente Call Option
has expired and referred to its expiry having taken place in its interim report for the six-month period ended 30 June 2022, which was published
on 22 September 2022. If the Caliente Call Option was declared as being exercisable and was exercised, this would extinguish the Playtech
Call Option and the Playtech M&A Call Option. The Group has not changed its position with regard to this assumption and the matter is still
unresolved with the English litigation still ongoing.
In addition to the above, from 1 January 2025, if there is a change of control of Caliplay or any member of the Caliente group which holds a
regulatory permit under which Caliplay operates, each of the Group and Caliente shall be entitled (but not obligated), within 60 days of the time
of such change of control, to require that the Caliente group redeems the Group’s additional B2B services fee or (if the Playtech Call Option had
been exercised at that time) acquires Playtech’s 49% stake in Caliplay (together the “COC Option”). If such change of control were to take place
and the right to redeem/acquire were to occur, this would extinguish the Playtech Call Option (to the extent not exercised prior thereto) and the
Playtech M&A Call Option. As regards the COC Option, the Group made a judgement that as at 31 December 2022 this had no impact on the fair
value calculation of the Playtech M&A Call Option (i.e. allocated a 0% probability that Playtech would realise any value from the exercise of the
COC Option). As at 31 December 2023, the Group allocated a low probability that it would realise value from this option, instead of the Playtech
M&A Call Option. This is discussed further in part C of this Note.
Assessment of control and significant influence
As at 31 December 2023 and 2022 it was assessed that the Group did not have control over Caliplay, because it does not meet the criteria of
IFRS 10 Consolidated Financial Statements, paragraph 7 due to the following:
• Despite the Group previously having a nominated director on the Caliplay board in 2020 and having consent rights on certain decisions (in
each case, removed in 2021), there was no ability to control the relevant activities.
• The Playtech Call Option or the Playtech M&A Call Option, if exercised, would result in Playtech having up to 49% of the voting rights and
would not result in Playtech having control.
• Whilst the Group 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 2023 and 2022, the Group has significant influence over Caliplay because it meets one or more of the criteria under IAS 28,
paragraph 6 as follows:
• The standard operator revenue by itself is not considered to give rise to significant influence; however, when combined with the additional B2B
services fee, this is an indicator of significant influence.
• The material transaction of the historical loan funding is also an indicator of significant influence.
Accounting for each of the options
The Playtech Call Option was exercisable at 31 December 2023 and 2022, 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 7, 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.
206 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 21 – Investments and derivative financial assets continued
A. Investments in associates continued
Caliplay continued
Accounting for each of the options continued
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, net of tax
Total comprehensive income
31 December
2022 1,2
€’m
96.7
30.3
(78.1)
—
48.9
532.1
30.4
2.5
32.9
1 The 2022 balances above have been extracted from Caliplay’s draft 2022 financial statements.
2
The Group has been unable to obtain the full 2023 financial information from Caliplay. However, based on information provided by Caliplay, the estimated revenue is €700.4 million and estimated
profit from continuing operations before tax (which takes account of the deduction of the Group’s unpaid B2B licensee fees and additional B2B services fees) is €80.0 million.
Investment in ALFEA SPA
The Group has held 30.7% equity shares in ALFEA SPA since June 2018. At 31 December 2023, the Group’s value of the investment in ALFEA
SPA was €1.7 million (2022: €1.7 million). A share of profit of €0.1 million was recognised in profit or loss for the year ended 31 December 2023
(2022: a share of profit of €0.1 million was recognised in profit or loss).
Investment in Galera
In June 2021, the Group entered into an agreement with Ocean 88 Holdings Ltd (Ocean 88) which is the sole holder of Galera Gaming Group
(together “Galera”), a company registered in Brazil. Galera offers and operates online and mobile sports betting and gaming (poker, casino,
etc.) in Brazil. They will continue to do so under the local regulatory licence, when this becomes available, and will expand to other gaming and
gambling products based on the local licence conditions.
The Group’s total consideration paid for the investment in Galera was $5.0 million (€4.2 million) in the year ended 31 December 2021, which was
the consideration for the option to subscribe and purchase from Galera an amount of shares equal to 40% in Galera at nominal price.
In addition to the investment amount paid, Playtech made available to Galera a line of credit up to $20.0 million. In 2022, an amendment was
signed to the original framework agreement to increase the credit line to $45.0 million. As at 31 December 2023, an amount of €39.2 million,
which is included in loans receivable under other non-current assets (refer to Note 22), has been drawn down (2022: €26.9 million). An amount of
€12.3 million has been loaned in the year ended 31 December 2023. 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 €1.6 million at
31 December 2023 (2022: €1.1 million).
In respect of the loan receivable from Galera, even though the framework agreement does not state a set repayment term, management has
assessed that this should still be recognised as a loan as opposed to part of the overall investment in associate in line with IAS 28. The Directors
have made a judgement that the loan will be settled from operational cash flows as opposed to being settled as part of an overall transaction.
If the Group had determined that the loan was part of the overall investment in associate, an additional cumulative €17.3 million share of loss of
associate would have been recorded in retained earnings since the investment was made, of which €3.6 million would have been recognised in
2023 in the profit or loss (2022: if the Group had determined that the loan was part of the overall investment in associate, an additional cumulative
€13.7 million share of loss of associate would have been recorded in retained earnings since the investment was made, of which €11.6 million
would have been recognised in 2022 in profit or loss).
On 31 October 2023, Ocean 88 acquired 60% of F12.bet. Playtech has loaned Ocean 88 the amount of $10.1 million (€9.5 million) for the
acquisition of F12.bet which is included in loans receivable from related parties (refer to Note 22). The loan is repayable within five years from
the disbursement date. The Group recognised an allowance for expected credit losses for the additional loan to Galera of €0.4 million as at
31 December 2023 (2022: €Nil).
Playtech has assessed whether it holds power to control Galera and it was concluded that this is not the case. Even if the option is exercised,
it would only result in a 40% voting right over the operating entity and therefore no control.
Under the agreement in place:
• the standard operator income to be generated from services provided to Galera when combined with the additional B2B services fee, the loan
and certain other contractual rights, are all indicators of significant influence; and
• the Group provides standard B2B services (similar to services provided to other B2B customers) as well as additional services to Galera that
Galera requires to assist it in successfully running its operations, which could be considered essential technical information.
Considering the above factors, the Group has significant influence under IAS 28, paragraph 6 over Galera.
Playtech plc Annual Report and Financial Statements 2023
207
Financial Statements
Note 21 – Investments and derivative financial assets continued
A. Investments in associates continued
Investment in Galera continued
As the option is currently exercisable and gives Playtech access to the returns associated with the ownership interest, the investment is treated
as an investment in associate. Playtech’s interest in Galera is accounted for using the equity method in the consolidated financial statements.
Galera is currently loss-making. If the call option is exercised by Playtech, the Group will no longer provide certain services and as such will no
longer be entitled to the additional B2B services fee. The additional B2B services fee was €Nil in the year ended 31 December 2023 (2022: €Nil).
The cost of the investment was deemed to be the price paid for the option of $5.0 million (€4.2 million), which was reduced to €Nil through the
recognition of the Group’s share of losses.
Investment in LSports
Background
In November 2022, the Group entered into the following transactions:
• acquisition of 15% of Statscore for a total consideration of €1.8 million. As a result of this transaction Statscore became a 100% subsidiary of
the Group;
• disposal of 100% of Statscore to LSports Data Ltd (“LSports”) for a total consideration of €7.5 million (settled through the acquisition of
LSports in shares) less a novated inter-company loan of €1.6 million, therefore a non-cash net consideration of €5.9 million; and
• acquisition of 31% of LSports for a total consideration of €36.7 million, which also included an option to acquire further shares (up to 18.11%) in
LSports. Of the total consideration, €29.2 million was paid in cash with the balance offset against the disposal proceeds of Statscore as per
the above.
As a result of the disposal of 100% of Statscore, the Group realised a loss of €8.8 million which has been recognised in profit or loss for the year
ended 31 December 2022 and is made up as follows:
Net asset position as at the date of the disposal (including goodwill of €12.4 million)
Net consideration
Loss on disposal
2022
€’m
14.7
(5.9)
8.8
Furthermore, the Group has an option to acquire up to 49% (so an additional 18%) of the equity of LSports (“LSports Option”). The LSports
Option is exercisable under the following conditions:
• within 90 days from the date of receipt of the LSports audited financial statements for each of the years ending 31 December 2024, 2025
and 2026; or
• at any time until 31 December 2026 subject and immediately prior to the consummation of an Initial Public Offering or Merger & Acquisition
event of LSports.
The exercise price of the option will be equal to the product of:
i.
ii.
the % of the aggregate shares purchased upon exercise of the PT option out of all shares of the company multiplied by
the greater of either:
a.
LSports EBITDA preceding the time of exercise as reflected in the company’s annual audited financial statements for that year,
multiplied by a factor of 7; or
b. €115 million.
The fair value of the option acquired was €1.4 million, which was part of the total consideration of €36.7 million. As at 31 December 2023, the fair
value of the LSports derivative financial asset increased to €4.8 million. The difference of €3.4 million between the fair value at 31 December 2023
and the fair value at 31 December 2022 has been recognised in profit or loss for the year ended 31 December 2023 (refer to part of Note 21C).
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.
208 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 21 – Investments and derivative financial assets continued
A. Investments in associates continued
Investment in LSports continued
Assessment of control and significant influence
As at the date of acquisition, 31 December 2023 and 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 the appointment and representation on the board of directors by a Playtech employee as at 31 December 2023, there is still no ability
to control the relevant activities, as the total number of directors including the Playtech appointed director is five;
• Playtech has neither the ability to change any members of the board nor of the management of LSports; and
• as at 31 December 2023 and 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 2023 and 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 the Playtech employee appointed on the board of LSports, enabling it to therefore participate in policy-making
processes, including decisions about dividends and/or other distributions. As a result of this assessment, LSports has been recognised as an
investment in associate.
The LSports option, which 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 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
Goodwill is not recognised separately but is included as part of the carrying amount of the investment in associate. The total share of profit
recognised in profit or loss in the year ended 31 December 2023 from the investment is LSports was €2.1 million (2022: €0.3 million). This
includes the amortisation of intangibles and the release of the deferred tax liability, arising on acquisition, and the share of the LSports profits,
with a corresponding entry against the investment in associate.
During 2023, the Group received a dividend of €1.8 million from LSports (2022: €Nil), which reduced the investment in associate value in the
consolidated balance sheet.
Investment in Stats International
Background
In January 2022, the Group provided a $2.3 million loan to Stats International Limited (“Stats”), at an interest rate of 3.5% and a repayment date of
30 June 2024. As at 31 December 2023 and 2022, the carrying value of the loan was €2.2 million (Note 22). The Stats group’s business activities
are focused on securing rights in connection with sporting competitions and the exploitation of the same, typically in exchange for the payment
of certain fees and provision of analytical and statistical services by the Stats group to the relevant rightsholder. The initial focus of the Stats
group is on Brazilian sports competitions.
In May 2023, the Group and Stats signed an amended loan agreement which, amongst other things, changed the repayment obligations such
that the final repayment date will be 31 December 2026 and the loan agreement will be novated from Stats to Jewelrock (Stats’ sole shareholder)
in consideration of $1. Moreover, a framework agreement was signed between Stats and Playtech whereby Playtech, for a €1 consideration, has
been granted the option to acquire from Jewelrock 36% of the issued share capital of Stats.
Finally, Playtech entered into a service agreement whereby Playtech provides Stats its business development and knowledge-sharing services
in connection with the operational and industry standard procedures of Stats in exchange for additional B2B services fee as per Note 10. As the
business is still a start-up, the additional B2B services fee as at 31 December 2023 was €Nil (2022: €Nil). Once the option is exercised, the Group
would no longer provide certain services and, as such, would no longer be entitled to the additional B2B services fee.
Playtech plc Annual Report and Financial Statements 2023
209
Financial Statements
Note 21 – Investments and derivative financial assets continued
A. Investments in associates continued
Investment in Stats International continued
Background continued
The option may be exercised at any time but prior to the termination of all sporting rights agreements. It shall also lapse on the expiry or
termination of the Playtech service agreement in accordance with its terms or at the written election of Playtech.
Playtech has assessed whether it holds power to control the investee and it was concluded that this is not the case. Even if the option is
exercised, it would only result in a 36% voting right over the operating entity and therefore no control.
However, Playtech has assessed whether the Group has significant influence over Stats and due to the existence of the service agreement
whereby Playtech would be assisting a start-up business by providing knowledge-sharing services, these could be considered essential
technical information. Considering this, it was concluded that the Group has significant influence under IAS 28, paragraph 6, over Stats.
The cost of the option, which was considered to be the inherent value of Playtech allowing the loan repayment date to be extended, is
considered negligible. No share of profits/losses have been recognised as at 31 December 2023 in profit or loss as these were immaterial.
Investment in NorthStar
Background
NorthStar Gaming Inc. is a Canadian gaming brand which was incorporated under the laws of Ontario in Q4 2021. In Q2 2022, NorthStar Gaming
Inc. received its licence from the Alcohol and Gaming Commission of Ontario (AGCO) and launched its online gaming site www.northstarbets.ca
which offers access to regulated sports betting markets, and a robust and curated casino offering, including the most popular slot offerings
and live dealer games. The principal reason of the acquisition is the attractive opportunity considered by Playtech to increase its footprint in the
growing Canadian betting data market segment.
In December 2022, the Group issued NorthStar Gaming Inc. a convertible loan of CAD 12.25 million with conditions being that upon the
completion of a reverse takeover (RTO) transaction the loan could be converted into common shares, A warrants and B warrants of the post-
RTO consolidated entity. Baden Resources, a company which was listed on the TSX, entered into a conditional agreement to acquire NorthStar
Gaming Inc. for shares (i.e. complete an RTO of NorthStar Gaming Inc.). The fair value of the loan as at 31 December 2022 was €8.4 million.
In March 2023, the RTO was completed and Baden Resources changed its name to NorthStar Gaming Holdings (“NorthStar”). These events
triggered the automatic conversion of the Group’s convertible loan into common shares in NorthStar Gaming Inc. (effective immediately prior to
closing) and then immediately thereafter on closing those shares were exchanged for NorthStar common shares.
When the loan was converted into NorthStar common shares the Group also became the holder of NorthStar Warrants (half of which are
exercisable at CAD 0.85 per share and the other half at CAD 0.90 per share) which, if exercised, would result in the Group further increasing its
shareholding in NorthStar. These warrants expire on the fifth anniversary of their issue.
In September 2023, the Group entered into a subscription agreement with NorthStar whereby additional shares and warrants (half of which
are exercisable at CAD 0.36 per share and the other half at CAD 0.40 per share, in each case expiring on the fifth anniversary of their issue)
were acquired for CAD 5.0 million. At the time of this investment, which closed in October 2023, Playtech also loaned NorthStar an 8% senior
convertible debenture for CAD 5.0 million.
After the additional investment in October 2023, Playtech owns approximately 27.5% of the issued and outstanding common shares of
NorthStar. If the convertible debenture were to be converted into common shares and all of the Group’s warrants were to be exercised, the
Group could potentially further increase its stake beyond 40% of the issued and outstanding common shares.
The Group’s convertible debenture has been classified at fair value through profit or loss based on IFRS 9 criteria. As at 31 December 2023,
an amount of CAD 5.0 million (€3.5 million), which is included in loans receivable from related parties (refer to Note 22), has been drawn
down (2022: €Nil). The loan is required to be repaid to Playtech by October 2026 or upon conversion (to the extent not fully converted) once
conversion criteria are met.
The fair value of all of Playtech’s warrants is €Nil as at 31 December 2023 (refer Note 21C).
Assessment of control and significant influence
As at the date of acquisition and 31 December 2023, it was assessed that the Group did not have control over NorthStar, because it does not
meet the criteria of IFRS 10 Consolidated Financial Statements, paragraph 7 due to the following:
• despite representation on the NorthStar board of directors by Playtech’s CFO from the initial investment and later on, with the additional
investment made, a further Playtech employee also being appointed, there is still no ability to control the relevant activities, as the total number
of directors is eight; and
• Playtech has neither the ability to change any other members of the NorthStar board nor the management of NorthStar.
Per the above assessment, Playtech does not hold power over the investee and as such does not have control.
As at 31 December 2023, the Group has significant influence over NorthStar because it meets one or more of the criteria under IAS 28,
paragraph 6, the main one being that it has two appointed members sitting on the board of NorthStar, enabling it to therefore participate in
policy-making processes, including decisions about dividends and/or other distributions. As a result of this assessment NorthStar has been
recognised as an investment in associate.
The NorthStar warrants are fair valued as per paragraph 14 of IAS 28 and shown as a derivative financial asset in accordance with IFRS 9
(refer to Note 21C).
210 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 21 – Investments and derivative financial assets continued
A. Investments in associates continued
Investment in NorthStar continued
Purchase Price Allocation (PPA)
The Group has prepared a PPA following the acquisition of the investment, where any difference between the cost of the investment and
Playtech’s share of the net fair value of NorthStar’s identifiable assets and liabilities results in goodwill.
Details of the provisional fair value of identifiable assets and liabilities acquired, investment consideration and goodwill are as follows:
Net book value of assets acquired
Fair value of customer contracts and relationships
Fair value of brand
Total net assets
Total consideration
Goodwill
Playtech’s share
of net fair value
of the identifiable
assets and
liabilities acquired
2023
€’m
0.4
1.0
0.9
2.3
8.4
6.1
Goodwill is not recognised separately but is included as part of the carrying amount of the investment in associate. Up until October 2023,
Playtech’s shareholding was diluted to 15% due to NorthStar issuing more shares as part of an acquisition they completed in May 2023.
Playtech’s shareholding for November and December 2023 was 27.5%. The total share of loss recognised in profit or loss in the year ended
31 December 2023 from the investment in NorthStar was €2.8 million (2022: €Nil). This includes the amortisation of intangibles, arising on
acquisition, and the share of NorthStar’s losses, with a corresponding entry against the investment in associate.
Investment in Sporting News Holdings Limited
Background
In August 2023, the Group acquired 12.6% of Sporting News Holdings Limited (“TSN”), for a total consideration of $6.3 million (€5.8 million).
TSN’s principal activities are the sale of digital advertising and the offering of media services, the provision of multimedia sports content across
internet-enabled digital platforms and the distribution directly to customers and business clients around the world. The company is incorporated
in the Isle of Man. The principal reason of the acquisition is the attractive opportunity considered by Playtech to increase its footprint in the
growing sports and media market segment.
Assessment of control and significant influence
As at the date of acquisition and at 31 December 2023 it was assessed that the Group did not have control over TSN, because it does not meet
the criteria of IFRS 10 Consolidated Financial Statements, paragraph 7 due to the following:
• despite Playtech having the right to appoint a director on the TSN board, as at 31 December 2023, one had not yet been appointed.
Playtech has preferred to only appoint an observer to the board. Moreover, once Playtech appoints a director, there is still no ability to
control the relevant activities, as the total number of directors including potentially one Playtech appointed director will be five; and
• Playtech has neither the ability to change any members of the board nor of the management of TSN.
Per the above assessment, Playtech does not hold power over the investee and as such does not have control.
As at 31 December 2023, the Group has significant influence over TSN because it meets one or more of the criteria under IAS 28, paragraph 6,
the main one being Playtech having the ability to appoint a member on the board of TSN, enabling it to therefore participate in policy-making
processes, including decisions about dividends and/or other distributions. As a result of this assessment TSN has been recognised as an
investment in associate.
The cost of the investment was deemed to be the consideration paid for the shares of $6.3 million (€5.8 million), which was reduced by
€0.2 million on 31 December 2023 through the recognition of the Group’s share of losses.
Other investments in associates that are fair valued under IFRS9 per IAS 28, paragraph 14
The following are also investments in associates where the Group has significant influence but where the option is not currently exercisable.
As there is no current access to profits, the relevant option is fair valued under IFRS 9, and disclosed as derivative financial assets under part C
of this Note:
• Wplay;
• Tenbet (Costa Rica); and
• Onjoc (Panama).
The financial information required for investments in associates, other than Caliplay, has not been included here as from a Group perspective the
Directors do not consider them to have a material impact jointly or separately.
Playtech plc Annual Report and Financial Statements 2023
211
Financial Statements
Note 21 – Investments and derivative financial assets continued
B. Other investments
Balance sheet
Listed investments
Investment in Tenlot Guatemala
Investment in Tentech Costa Rica
Investment in Gameco
Investment in Hard Rock Digital
Total other investments
Statement of comprehensive income
Profit and loss
Change in fair value of equity investments
Impairment of investment in Gameco (included in the impairment of financial assets)
Other comprehensive income
Foreign exchange movement from equity investments held in a non-Euro functional subsidiary
2023
€’m
15.8
—
—
—
77.0
92.8
2023
€’m
(6.6)
(1.3)
(7.9)
(2.6)
2022
€’m
1.4
4.4
2.1
1.3
—
9.2
2022
€’m
(0.3)
—
(0.3)
—
Listed investments
The Group has shares in listed securities, noting that new shares in listed securities were purchased during the year for €14.3 million. The fair
values of these equity shares are determined by reference to published price quotations in an active market. For the year ended 31 December 2023,
the fair values of these listed securities have increased by €0.1 million (2022: decrease of €0.3 million).
Investment in Tenlot Guatemala
In 2020, the Group entered into an agreement with Tenlot Guatemala, a member of the Tenlot Group. Tenlot Guatemala, which is in the lottery
business in Guatemala, commenced its activity in 2018.
The Group acquired a 10% equity holding in Tenlot Guatemala for a total consideration of $5.0 million (€4.4 million) in 2020, which has been
accounted at fair value through profit or loss under IFRS 9.
The fair value of the equity holding as at 31 December 2023 was reduced to €Nil because of changes to market conditions which led to
changes in its original business plans (2022: €4.4 million). The fair value of the equity holding has decreased by €4.4 million in the year ended
31 December 2023.
In addition, the Group was granted a 10% equity holding in Super Sports S.A. at no additional cost. The Group also has an option to acquire an
additional 80% equity holding in Super Sports S.A. If the option is exercised, the Group would no longer provide certain services and, as such,
would no longer be entitled to the additional B2B services fee. The additional B2B services fee was €Nil for the year ended 31 December 2023
(2022: €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 2023 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 2023 was reduced to €Nil (2022: €2.1 million) because of changes to market conditions
which led to changes in its original business plans. The fair value of the equity holding has decreased by €2.3 million in the year ended
31 December 2023.
212 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 21 – 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 (€3.8 million) in the
form of a debt security with 8% interest. In December 2022, Gameco acquired Green Jade Games and, subsequently, the Playtech debt was
converted into equity shares, representing a 7.1% interest in the newly formed group. Immediately prior to the conversion, the loan was impaired
by €3.0 million, and this has been recognised in profit or loss in the prior year.
The 7.1% equity holding in the newly formed group was accounted at fair value through profit or loss under IFRS 9 at 31 December 2022.
As at 31 December 2023, the fair value of the equity holding has been impaired down to €Nil (2022: €1.3 million).
Investment in Hard Rock Digital
On 14 March 2023, the Group invested $85.0 million (€79.8 million) in Hard Rock Digital (HRD) in exchange for a small minority interest in a
combination of equity shares and warrants. HRD is the exclusive Hard Rock International and Seminole Gaming vehicle for interactive gaming
and sports betting on a global basis.
The Group assessed whether the warrants meet the definition of a separate derivative as per IFRS 9. A financial instrument or other contract
should have all three of the following characteristics:
•
•
its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate,
index of prices or rates, credit rating or credit index, or other variable, provided, in the case of a non-financial variable, that the variable is not
specific to a party to the contract (sometimes called the “underlying”);
it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be
expected to have a similar response to changes in market factors; and
•
it is settled at a future date.
Management made a judgement that the warrants do not meet the definition of a separate derivative asset as: (i) the value of the warrants is
part of the total investment and cannot be distinguished between the two and therefore the value of the warrants was deemed to be equal to the
equity shares value; and (ii) the consideration was paid at the time of the transaction.
The equity investment in HRD does not meet the definition of held for trading, as the investment was acquired for long-term investment purposes
and with no current intention for sale. In this respect, the investment will be classified as an investment at fair value through profit or loss with initial
and subsequent recognition at fair value. Any subsequent gain/loss will be recognised in profit or loss.
Since the date the investment was made until 31 December 2023, there have been no changes in the operations of HRD that would indicate
that the fair value of the investment would be different to the original arm’s length price paid of $85.0 million (€79.8 million). This continues to be
the case, despite the positive outcome of the federal appeals court overturning a ruling that prevented HRD from relaunching its operations in
support of The Seminole Tribe of Florida’s mobile and retail sports books in Florida, a decision that is currently being appealed.
The foreign exchange movement of the investment held in HRD is recorded through other comprehensive income as the investment is held in a
USD functional currency entity. The impact of the foreign exchange movement of the investment is a loss of €2.8 million in other comprehensive
income for the year ended 31 December 2023.
C. Derivative financial assets
Balance sheet
Playtech M&A Call Option (Caliplay)
Wplay
Onjoc
Tenbet
NorthStar warrants (Note 21A)
LSports (Note 21A)
Total derivative financial assets
2023
€’m
730.2
88.0
3.1
1.7
—
4.8
827.8
2022
€’m
524.0
93.5
8.6
8.9
—
1.4
636.4
Playtech plc Annual Report and Financial Statements 2023
213
Financial Statements
Note 21 – Investments and derivative financial assets continued
C. Derivative financial assets continued
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
LSports
Fair value change of call option (Note 21A)
Total comprehensive income impact
2023
€’m
180.9
—
(16.0)
(2.7)
(2.8)
(5.3)
(0.2)
(6.9)
(0.3)
3.4
150.1
2022
€’m
(13.3)
—
30.6
(9.4)
5.7
1.3
0.4
(3.2)
0.7
—
12.8
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 2023 and 2022, the valuation methodology used for the Playtech M&A Call Option was that of a discounted cash flow (DCF)
approach with a market exit multiple assumption.
As already mentioned in part A of Note 21, 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.
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 2023 and 2022.
Furthermore, and as disclosed in further detail under Note 7, the disputes with Caliplay now also include a dispute in relation to the additional B2B
services fees and B2B licensee fees. The dispute relates to amounts that date back to the summer of 2023 and remain outstanding from Caliplay
today. The impact of this dispute has been considered below by including a higher specific risk premium in the discount rate used for the DCF, to
reflect what a willing third-party buyer would pay for the rights to this option, as things stand with the ongoing dispute.
214 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 21 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Caliplay continued
Valuation
The Group has assessed the fair value of the Playtech M&A Option as at 31 December 2023 using a DCF approach with a market exit
multiple assumption.
The Group’s view of a reasonable market participant base discount rate for the 31 December 2023 valuation is unchanged since last year.
However, due to the ongoing legal proceedings and the dispute with Caliplay as described above, the Group has adjusted the fair value of
the Playtech M&A Call Option to reflect this risk, by including an additional company-specific risk premium in the discount rate, which overall
increased it to 20% (2022: 16%).
The Group also made assumptions on the probability of a possible transaction that may be completed on a number of exit date scenarios
over a five-year period, until December 2028. Management did not model a scenario of no exit as this is considered highly remote. The Group
used a compound annual growth rate of 17.0% (2022: 17.2%) on revenue over the forecasted cash flow period, an average Adjusted EBITDA
margin of 31.3% (2022: 26.3%) and an exit multiple of 7.7x (2022: 9.6x). The decrease in the exit EBITDA multiple is supported by the observed
median EV/EBITDA multiple of the publicly listed peers as at 31 December 2023 and share price declines. 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 10.0% (2022: 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. Finally, taking account of matters
arising in the period, Playtech has included some probability weighted scenarios to consider the impact of the COC Option as explained in
part A of this Note, noting that the probabilities assigned to this scenario are above zero but low, as compared to the 31 December 2022 valuation
where it was assumed that there was no impact (i.e. 0% probability scenarios).
As at 31 December 2023, the fair value of the Playtech M&A Call Option was $805.8 million (2022: $560.6 million) which converted to
€730.2 million (2022: €524.0 million). The period-on-period change in the fair value of the Playtech M&A call option is a combination of an uplift:
•
•
in the forecasts which consider Caliplay’s strong 2023 performance which exceeded previous expectations; and
following the reduction of the right to Caliplay shares that a service provider of Playtech had under its services agreement which was partly
redeemed during the period through a €41.3 million redemption payment (the value of such right being previously deducted from the fair value
of the Playtech M&A Call Option).
These were partially offset by:
• the reduction in the exit multiple as explained above;
• the increase in the discount rate to reflect the ongoing litigation risk;
• unfavourable movement in the USD to EUR foreign exchange rate; and
• the impact of including scenarios whereby there is a small probability that the COC Option will be exercised.
Sensitivity analysis
The assumptions and judgements made in the valuation of the derivative financial asset as at 31 December 2023 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 18% to 22% will result in a fair value of the derivative financial asset in the range of €679.6 million –
€785.6 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €691.3 million –
€769.3 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €652.4 million –
€808.2 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €598.9 million –
€885.3 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €487.5 million –
€1,066.5 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 €666.9 million –
€793.7 million.
•
•
•
•
If the 10% DLOM applied for the two-year period post exercise of the Playtech M&A Option fluctuates by 5% (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 be
within the range of €694.1 million – €766.6 million.
If the incremental annual DLOM on option fluctuates by 2.5% (to 2.5% and 7.5% instead of 5%) this will result in a fair value of the derivative
financial asset within the range of €690.4 million – €769.3 million.
If the M&A call option weighted at 100% probability of exercise relative to the standalone COC option payment, regardless of the exit date
scenario, the fair value of the derivative financial asset would be €811.0 million.
If the M&A call option weighted at even 50% between the probability of exercise of the standalone Playtech M&A Call Option and the
standalone COC option payment, the fair value of the derivative financial asset would be €621.6 million.
Playtech plc Annual Report and Financial Statements 2023
215
Financial Statements
Note 21 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Wplay
In August 2019, Playtech entered into a structured agreement with Aquila Global Group SAS (“Wplay”), which has a licence to operate online
gaming products and services in Colombia. Under the agreement, the Group provides Wplay its technology products, where it receives
standard operator revenue and additional B2B services fee as per Note 10. 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 2022 this option was exercisable in
August 2023. In 2023, the option exercise date was deferred to February 2024, however management was in active discussions with Wplay to
further extend the option exercise date pre-year end. The extension was signed in February 2024, and the option exercise date was deferred
to February 2025, or earlier if an M&A event takes place. For the call option valuation as at 31 December 2023, Playtech assumed that the call
option cannot be exercised any date before February 2025. 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 €1.2 million for the year
ended 31 December 2023 (2022: €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.
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 on 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 2023, the option is not exercisable and therefore can be disregarded in the
assessment of power.
Per the above assessment Playtech does not hold power over the investee and as such does not have control.
With regard 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, the
Group has an investment in associate but with no access to profits. As such, the option is fair valued as per paragraph 14 of IAS 28 and shown as
a derivative financial asset in accordance with IFRS 9.
The Group has given two loans to Wplay, an interest-bearing and a non-interest-bearing one, of $1.7 million (€1.6 million) and $0.5 million
(€0.5 million) respectively. The combined outstanding balance as at 31 December 2023 is $1.3 million (€1.3 million) and is due for repayment
within the next 12 months. The loans are included in loans receivable from related parties (refer to Note 24).
Valuation
The fair value of the option at 31 December 2023 has been estimated using a DCF approach with a market exit multiple assumption. The Group
used a discount rate of 22% (2022: 25%), the decrease reflecting the maturity stage of the Wplay business, as well as a discount for illiquidity
and control until the expected Playtech exit date of February 2025 (2022: expected exit date of December 2026). The Group used a compound
annual growth rate of 8.2% (2022: 24.7%) over the forecasted cash flow period, an average Adjusted EBITDA margin of 28.5% (2022: 20.6%)
and an exit multiple of 10.2x (2022: 9.6x). 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 2023, the fair value of the Wplay derivative financial asset is €88.0 million. The difference of €5.5 million between the fair
value at 31 December 2022 of €93.5 million and the fair value at 31 December 2023 has been recognised as follows:
a.
€2.7 million derived from the fair value decrease of the derivative call option calculated using the DCF model in profit or loss for the year
ended 31 December 2023. The decrease was due to downgrading the forecasts because of the new marketing regulations becoming
effective in Colombia from January 2024, which restrict the amounts that can be spent on marketing each year by operators, and offset by
the decrease in the discount rate and the increase in the exit multiple.
b.
€2.8 million derived from the fair value decrease 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 2023.
216 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 21 – 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 2023 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 17% to 27% will result in a fair value of the derivative financial asset in the range of €74.3 million –
€105.1 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €83.6 million –
€92.4 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €79.2 million –
€96.8 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €83.1 million –
€93.0 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €78.3 million –
€98.0 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 €81.2 million –
€94.9 million.
•
If the expected Playtech exit date is extended by one year, the fair value of the derivative financial asset will decrease to €82.9 million.
Onjoc
In June 2020, Playtech entered into a framework agreement with ONJOC CORP. (“Onjoc”), which holds a licence to operate online sports
betting, gaming and gambling activities in Panama. The Group has no equity holding in Onjoc but has an option to acquire 50%. Under the
agreement the Group provides Onjoc its technology products, where it receives standard operator revenue and additional B2B services fee
as per Note 10. 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 2023 (2022: €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 propose 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 2023, the option is not exercisable and therefore can be disregarded in the
assessment of power.
Per the above assessment Playtech does not hold power over the investee and as such does not have control.
With regard 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 propose 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, the
Group has an investment in associate but with no access to profits. As such, the option is fair valued as per paragraph 14 of IAS 28 and shown
as a derivative financial asset in accordance with IFRS 9.
The Group has given an interest-bearing loan to Onjoc of €2.3 million (2022: €1.8 million) which is due for repayment in October 2025 and is
included in loans receivable from related parties (refer to Note 22).
Playtech plc Annual Report and Financial Statements 2023
217
Financial Statements
Note 21 – Investments and derivative financial assets continued
C. Derivative financial assets continued
Onjoc continued
Valuation
The fair value of the option at 31 December 2023 has been estimated using a DCF approach with a market exit multiple assumption. The Group
used a discount rate of 32% (2022: 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 (2022: expected exit date of December
2027). The Group used a compound annual growth rate of 49.2% (2022: 60.1%) over the forecasted cash flow period and an average Adjusted
EBITDA margin of 24.2% (2022: 20.4%). 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 2023, the fair value of the Onjoc derivative financial asset is €3.1 million. The difference of €5.5 million between the fair value
at 31 December 2022 of €8.6 million and the fair value at 31 December 2023 has been recognised as follows:
a.
€5.3 million derived from the fair value decrease of the derivative call option calculated using the DCF model in profit or loss in the
year ended 31 December 2023. This decrease is mostly due to the revised cash flow forecasts used in the valuation which have been
downgraded based on Onjoc’s current performance.
b.
€0.2 million derived from the fair value decrease from the exchange rate fluctuation of USD to EUR (as the derivative call option is under a
foreign subsidiary of the Group whose functional currency is USD) in other comprehensive income in the year ended 31 December 2023.
Sensitivity analysis
The assumptions and judgements made in the valuation of the derivative financial asset as at 31 December 2023 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 27% to 37% will result in a fair value of the derivative financial asset in the range of €2.4 million –
€4.0 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €2.9 million –
€3.3 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €2.7 million –
€3.6 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €2.2 million – €4.1 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €1.3 million – €5.1 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 €2.5 million – €3.7 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 2023 (2022: €Nil). In H1 2023, the Group signed an
amendment to the Tenbet agreement in which the option can be exercised at any time from July 2024 (previously 35 months of Tenbet going
live). In H2 2023, the Group signed an amendment to the Tenbet agreement in which the option can be exercised at any time from 1 January 2025
based on the condition that Tenbet has generated at least once, prior to the exercise, accumulative GGR (as defined in the agreement) of at least
$10.0 million, in a consecutive 12-month period.
Under the existing agreements, the Group has provided Tenbet with a credit facility of €4.5 million, out of which €4.2 million (Note 22) had been
drawn down as at 31 December 2023 (2022: €2.1 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, nor change, any members of the board of Tenbet; and
• as at 31 December 2023, the option is not exercisable and therefore can be disregarded in the assessment of power.
Per the above assessment, Playtech does not hold power over the investee and as such does not have control.
With regard to the assessment of significant influence, the standard operator revenue alone is not considered to give rise to significant influence.
However, when combined with the additional B2B services fee, this is an indicator of significant influence. Furthermore, the Group 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, the Group has an investment in associate but with no access to profits. As such, the option is fair valued as per paragraph 14 of
IAS 28 and shown as a derivative financial asset in accordance with IFRS 9.
218 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued Financial Statements
Note 21 – 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 2023 has been estimated using a DCF approach with a market exit multiple assumption. The Group
used a discount rate of 33% (2022: 35%) reflecting the cash flow risk given the high growth rates in place and the early stages of the business,
as well as a discount for illiquidity and control until the expected Playtech exit date of December 2028 (2022: expected exit date of December
2027). The Group used a compound annual growth rate of 96.2% (2022: 135%) over the forecasted cash flow period and an average Adjusted
EBITDA margin of 0.9% (2022: average of -59.8%). 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 2023, the fair value of the Tenbet derivative financial asset is €1.7 million. The difference of €7.2 million between the fair value
at 31 December 2022 of €8.9 million and the fair value at 31 December 2023 has been recognised as follows:
a.
€6.9 million derived from the fair value decrease of the derivative call option calculated using the DCF model in profit or loss in the
year ended 31 December 2023. This decrease is mostly due to the revised cash flow forecasts used in the valuation which have been
downgraded based on Tenbet’s current performance.
b.
€0.3 million derived from the fair value decrease from the exchange rate fluctuation of USD to EUR (as the derivative call option is under a
foreign subsidiary of the Group whose functional currency is USD) in other comprehensive income in the year ended 31 December 2023.
Sensitivity analysis
The assumptions and judgements made in the valuation of the derivative financial asset as at 31 December 2023 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 €1.0 million –
€2.6 million.
• A 5% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €1.4 million –
€2.0 million.
• A 10% fluctuation in the Adjusted EBITDA margin will result in a fair value of the derivative financial asset within the range of €1.2 million –
€2.2 million.
• A 5% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €Nil – €3.9 million.
• A 10% fluctuation in the revenue growth rate will result in a fair value of the derivative financial asset within the range of €Nil – €6.3 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 €1.1 million – €2.3 million.
Playtech plc Annual Report and Financial Statements 2023
219
Financial Statements
Note 22 – 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 37)
Other receivables
The movement of loans and interest receivable is as follows:
Balance as at 1 January 2023
Net loans granted/repaid
Non-cash loans granted (transfer from trade receivables)
Non-cash loans repayment (transfer from trade payables)
Conversion of loan to equity investment (Note 21A)
Interest charge for the year
ECL
Impairment of loans receivable
Foreign exchange movements
Balance as at 31 December 2023
Split to:
Non-current assets
Current assets (Note 24)
Note 23 – Trade receivables
Trade receivables
Related parties (Note 37)
Trade receivables – net
Split to:
Non-current assets
Current assets
Note 24 – 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 receivable (net of ECL)
Loans receivable from related parties (net of ECL) (Note 37)
Other receivables from related parties (Note 37)
Other receivables
2023
€’m
4.3
2.2
58.7
3.1
58.5
10.2
137.0
2023
€’m
109.9
99.1
209.0
1.9
207.1
209.0
2023
€’m
23.3
14.8
24.4
4.4
16.4
0.5
1.2
0.3
15.2
2022
€’m
3.3
2.2
63.4
1.7
27.9
11.1
109.6
€’m
45.9
23.4
4.5
(0.3)
(8.4)
1.9
(0.9)
(1.5)
(1.3)
63.3
61.6
1.7
63.3
2022
€’m
144.5
20.5
165.0
1.1
163.9
165.0
2022
€’m
23.4
13.6
24.2
3.6
16.4
13.0
3.3
—
10.1
1
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.
100.5
107.6
220 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 25 – Cash and cash equivalents
Cash and cash equivalents for the purposes of the statement of cash flows comprises:
Cash at bank
Deposits
Cash and cash equivalents in the statement of cash flows
Less: expected credit loss (Note 39A)
2023
€’m
516.6
—
516.6
(0.4)
516.2
2022
€’m
426.8
0.1
426.9
(0.4)
426.5
Out of the total cash at bank, an amount of €9.4 million was held by payment processors as at 31 December 2023 (2022: €6.8 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.
Funds attributed to jackpots
Security deposits
Players’ balances
Note 26 – Assets held for sale
Assets
Property, plant and equipment
2023
€’m
81.1
29.9
41.9
152.9
2023
€’m
19.3
2022
€’m
84.7
29.6
39.8
154.1
2022
€’m
19.6
During 2021, the Group entered into a binding agreement for the disposal of a real estate area in Milan for a total consideration of €20.0
million. Accordingly, the real estate was classified as held for sale. Of the total consideration, €1.0 million was received during the year ended
31 December 2021. The advance received was classified as part of the liabilities directly associated with assets classified as held for sale.
The sale has been finalised but the disposal is expected to complete in H1 2025 with the movement of the trot track from La Maura area to
San Siro (previously it was expected that the sale would be completed during 2024).
Playtech plc Annual Report and Financial Statements 2023
221
Financial Statements
Note 27 – 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 the Directors are authorised to issue up to 1,000,000,000 shares of no par value.
The table below shows the movement of the shares:
2023
Number
of shares
2022
Number
of shares
N/A
309,294,243
N/A
309,294,243
At 1 January 2022
Exercise of options
At 31 December 2022/1 January 2023
Transfer from treasury shares to EBT
Exercise of options
At 31 December 2023
Shares in issue/
circulation
Number of shares
299,244,326
1,743,990
300,988,316
—
3,704,491
Treasury shares
Shares held by
EBT
Total
2,937,550
—
2,937,550
(2,937,550)
—
7,112,367
(1,743,990)
309,294,243
—
5,368,377
2,937,550
(3,704,491)
309,294,243
—
—
304,692,807
—
4,601,436 309,294,243
B. Employee Benefit Trust
In 2014, the Group established an Employee Benefit Trust by acquiring 5,517,241 shares for a total of €48.5 million.
In 2021, the Company transferred 7,028,339 shares held by the Company in treasury to the Employee Benefit Trust for a total of €22.6 million.
In 2023, the Company transferred 2,937,550 shares held by the Company in treasury to the Employee Benefit Trust for a total of €12.5 million.
During the year ended 31 December 2023, 3,704,491 shares (2022: 1,743,990) were issued at a cost of €11.9 million (2022: €6.0 million). As at
31 December 2023, a balance of 4,601,436 shares (2022: 5,368,377 shares) remains in the EBT with a cost of €17.8 million (2022: €17.2 million).
C. Share options exercised
During the year 3,880,633 (2022: 1,794,438) share options were exercised, of which 176,142 were cash settled (2022: 50,448).
D. Distribution of dividends
During 2023 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
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
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 28 – Loans and borrowings
The main credit facility of the Group is a revolving credit facility (RCF) up to €277.0 million and is available until October 2025, with an option to
extend by 12 months. Interest payable on the loan is based on SONIA depending on the currency of each withdrawal. As at the reporting date the
credit facility drawn amounted to €Nil (2022: €Nil).
Under the RCF, the covenants are monitored on a regular basis by the finance department, including modelling future projected cash flows
under a number of scenarios to stress-test any risk of covenant breaches, the results of which are reported to management and the Board of
Directors. The covenants are as follows:
• Leverage: Net Debt/Adjusted EBITDA to be less than 3.5:1 for the year ended 31 December 2023 (2022: less than 3.5:1).
•
Interest cover: Adjusted EBITDA/Interest to be over 4:1 for the year ended 31 December 2023 (2022: over 4:1).
As at 31 December 2023 and 2022 the Group met these financial covenants.
222 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 29 – Bonds
At 1 January 2022
Repayment of bonds
Release of capitalised expenses
At 31 December 2022/1 January 2023
Repayment of bonds
Issue of new bond
Release of capitalised expenses
At 31 December 2023
Split to:
Non-current
Current
2018 Bond
€’m
2019 Bond
€’m
2023 Bond
€’m
527.6
(330.0)
2.0
199.6
(200.0)
—
0.4
347.4
—
0.6
348.0
—
—
0.6
—
348.6
—
—
—
—
—
297.2
0.3
297.5
2023
€’m
646.1
—
646.1
Total
€’m
875.0
(330.0)
2.6
547.6
(200.0)
297.2
1.3
646.1
2022
€’m
348.0
199.6
547.6
Bonds
(a) 2018 Bond
On 12 October 2018, the Group issued €530.0 million of senior secured notes (the “2018 Bond”) maturing in October 2023. The net proceeds of
issuing the 2018 Bond after deducting commissions and other direct costs of issue totalled €523.4 million.
Commissions and other direct costs of issue have been offset against the principal balance and are amortised over the period of the 2018 Bond.
The issue price was 100% of its principal amount and bears interest from 12 October 2018 at the rate of 3.75% per annum payable semi-annually,
in arrears, on 12 April and 12 October commencing on 12 April 2019.
During the year ended 31 December 2022, the Group made a partial repayment towards the 2018 Bond of €330.0 million. It was then fully
repaid in 2023.
(b) 2019 Bond
On 7 March 2019, the Group issued €350 million of senior secured notes (the “2019 Bond”) maturing in March 2026. The net proceeds of issuing
the 2019 Bond after deducting commissions and other direct costs of issue totalled €345.7 million.
Commissions and other direct costs of issue have been offset against the principal balance and are amortised over the period of the 2019 Bond.
The issue price is 100% of its principal amount and bears interest from 7 March 2019 at a rate of 4.25% per annum payable semi-annually,
in arrears, on 7 September and 7 March commencing on 7 September 2019.
(c) 2023 Bond
On 28 June 2023, the Group issued €300.0 million of senior secured notes (the “2023 Bond”) maturing in June 2028. The net proceeds of
issuing the 2023 Bond after deducting commissions and other direct costs of issue totalled €297.2 million.
Commissions and other direct costs of issue have been offset against the principal balance and are amortised over the period of the 2023 Bond.
The issue price is 100% of its principal amount and bears interest from 28 June 2023 at a rate of 5.875% per annum payable semi-annually,
in arrears, on 28 December and 28 June commencing on 28 December 2023.
As at 31 December 2023 and 2022, the Group met the required interest cover financial covenant of 2:1 Adjusted EBITDA/Interest ratio, for the
combined 2018, 2019 and 2023 Bonds.
Playtech plc Annual Report and Financial Statements 2023
223
Financial Statements
Note 30 – 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 2023 are shown below:
Balance at 1 January 2023
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Balance at 31 December 2023
2022
Non-current
Current
2023
Non-current
Current
Legal and
regulatory
€’m
Contractual
€’m
7.3
0.6
(1.1)
(1.1)
5.7
4.2
1.9
(3.7)
(1.6)
0.8
Legal and
regulatory
€’m
Contractual
€’m
7.3
—
7.3
5.7
—
5.7
0.3
3.9
4.2
0.3
0.5
0.8
Other
€’m
2.4
0.9
(0.2)
(0.1)
3.0
Other
€’m
2.4
—
2.4
2.9
0.1
3.0
Total
€’m
13.9
3.4
(5.0)
(2.8)
9.5
Total
€’m
10.0
3.9
13.9
8.9
0.6
9.5
Provision for legal and regulatory issues
The Group is subject to proceedings and potential claims regarding complex legal matters which are subject to a different degree of uncertainty.
Provisions are held for various legal and regulatory issues that relate to matters arising in the normal course of business including, in particular,
various disputes that arose in relation to the operation of the various licences held by the Group’s subsidiary Snaitech. The uncertainty is due
to complex legislative and licensing frameworks in the various territories in which the Group operates. The Group also operates in certain
jurisdictions where legal and regulatory matters can take considerable time for the required local processes to be completed and the matters
to be resolved.
Contractual claims
The Group is subject to historic claims relating to contractual matters that arise with customers in the normal course of business. The Group
believes they have a robust defence to the claims raised and has provided for the likely settlement where an outflow of funds is probable.
The uncertainty relates to complex contractual dealings with a wide range of customers in various jurisdictions, and because, as noted above,
the Group operates in certain jurisdictions where contractual disputes can take considerable time to be resolved in the local legal system.
Given the uncertainties inherent, it is difficult to predict with certainty the outlay (or the timing thereof) which will derive from these matters.
It is therefore possible that the value of the provisions may vary further based on future developments. The Group monitors the status of these
matters and consults with its advisers and experts on legal and tax-related matters in arriving at the provisions recorded. The provisions
included represent the Directors’ best estimate of the potential outlay and none of the matters provided for are individually material to the
financial statements.
Accounting for uncertain tax positions
The Group is subject to various forms of tax in a number of jurisdictions. Given the nature of the industry and the jurisdictions within which the
Group operates, the tax, legal and regulatory regimes are continuously changing and subject to differing interpretations. As such, the Group
is exposed to a small number of uncertain tax positions and open audits/enquiries. Judgement is applied in order to adequately provide for
uncertain tax positions where it is believed that it is more likely than not that an economic outflow will arise. The Group has provided for uncertain
tax positions which meet the recognition threshold and these positions are included within tax liabilities. There is a risk that additional liabilities
could arise. Given the uncertainty and the complexity of application of international tax in the sector, it is not feasible to accurately quantify any
possible range of liability or exposure, and this has therefore not been disclosed.
224 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 31 – Contingent consideration
Non-current contingent consideration
Acquisition of Aus GMTC PTY Ltd
Others
Total non-current contingent consideration
Current contingent consideration consists of:
Other acquisitions
Total current contingent consideration
Total contingent consideration
The maximum contingent consideration payable is as follows:
Acquisition of Aus GMTC PTY Ltd
Other acquisitions
Note 32 – Trade payables
Suppliers
Customer liabilities
Note 33 – Deferred tax
The movement on the deferred tax is as shown below:
Balance at 1 January
Adjustment on initial recognition of IAS 12 amendment (restated Note 4A)
Balance at 1 January (restated)
Charge to profit or loss (Note 15)
On business combinations
At 31 December
Split as:
Deferred tax liability
Deferred tax asset
2023
€’m
5.4
0.4
5.8
0.4
0.4
6.2
2023
€’m
45.3
0.8
46.1
2023
€’m
46.0
20.9
66.9
2023
€’m
(10.8)
—
(10.8)
(87.4)
(0.9)
(99.1)
2023
€’m
(161.6)
62.5
(99.1)
2022
€’m
2.1
0.2
2.3
0.6
0.6
2.9
2022
€’m
46.7
0.8
47.5
2022
€’m
47.0
14.2
61.2
2022
€’m
14.0
1.5
15.5
(26.3)
—
(10.8)
2022
€’m
(124.8)
114.0
(10.8)
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 2023, the Directors continued to recognise deferred tax assets arising from temporary differences and tax losses carried
forward, with the latter only to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be
utilised. Please refer to Notes 7 and 15 for the assessment performed on the recognition of deferred tax in the period.
Playtech plc Annual Report and Financial Statements 2023
225
Financial Statements
Note 33 – Deferred tax continued
Details of the deferred tax outstanding as at 31 December 2023 and 2022 are as follows:
Deferred tax recognised on Group restructuring
Tax losses
Other temporary and deductible differences
Deferred tax on acquisitions
Intangible assets
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
Note 34 – 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 35 – Gaming and other taxes payable
Gaming tax
Other
2023
€’m
47.2
29.7
(6.4)
(81.2)
(88.4)
(99.1)
2023
€’m
(2.0)
—
(39.4)
0.1
(46.1)
(87.4)
2023
€’m
30.6
4.2
34.8
99.8
76.0
2.7
5.9
33.1
217.5
2023
€’m
116.1
—
116.1
2022
€’m
56.8
75.9
30.3
(88.4)
(85.4)
(10.8)
2022
€’m
(1.3)
(0.3)
(26.6)
(0.1)
2.0
(26.3)
2022
€’m
23.9
1.0
24.9
99.7
48.2
3.0
7.4
10.8
169.1
2022
€’m
112.5
0.3
112.8
Note 36 – Acquisitions during prior 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 ($3.0 million), with an additional consideration (capped at $50.0 million) in cash payable
in 2025 based on a pre-defined EBITDA calculation resulting from the performance of the developed games active during the year ending
30 September 2025. The consideration is calculated based on four times the pre-defined EBITDA for that year, less the cash consideration
already paid, plus the €1.8 million loan provided to the acquired company pre-acquisition.
226 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 37 – 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
Operating expenses
Investments in associates
Dividend income
Investments in associates
2023
€’m
2022
€’m
193.4
132.7
1.7
0.7
2.0
0.8
—
—
The revenue from investments in associates includes income from Caliplay, Galera, Wplay, Onjoc, Tenbet and NorthStar. The interest income
relates to the same companies except Caliplay and including Stats.
The following amounts were outstanding at the reporting date:
Trade receivables (Note 23)
Investments in associates
Other receivables (Note 24)
Investments in associates
Loans and interest receivable – current (Note 24)
Investments in associates
Loans and interest receivable – non-current (Note 22)
Investments in associates
2023
€’m
99.1
0.3
1.3
2022
€’m
20.5
—
3.4
60.9
29.0
The loans and interest receivables above do not include the expected credit losses. For the year ended 31 December 2023, 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
(2022: €0.1 million) and €2.4 million for more than one year (2022: €1.2 million).
The loans due from related parties are further disclosed in Note 21.
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
2023
€’m
16.5
0.1
0.1
2.8
19.5
2022
€’m
13.6
0.1
1.2
2.2
17.1
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 €12.5 million
(2022: €5.9 million).
Playtech plc Annual Report and Financial Statements 2023
227
Financial Statements
Note 38 – 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 Entretenimiento Online EAD
Bulgaria
100%
100%
100%
100%
100%
100%
100%
Main trading company of the Group up to December 2020, which
owned the intellectual property rights and licensed the software to
customers. From January 2021 onwards, following the transfer of
intellectual property rights to Playtech Software Limited, the principal
activity of this company 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
Manages the iPoker Network in regulated markets and is a main holding
company of the Group
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
PT Marketing Services Limited
British Virgin Islands
100%
Holding company
PT Operational Services Limited
British Virgin Islands
100%
Holding company
PT Network Management Limited
British Virgin Islands
100%
Holding company
Videobet Interactive Sweden AB
Quickspin AB
Best Gaming Technology GmbH
Playtech BGT Sports Limited
Sweden
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 EOOD
PTVB Management Limited
Bulgaria
Isle of Man
Techplay S.A. Software Limited
Israel
CSMS Limited
Mobenga AB Limited
PokerStrategy Ltd
Snai Rete Italia S.r.l.
PT Services UA LTD
Trinity Bet Operations Ltd
Euro live Technologies SIA
Bulgaria
Sweden
Gibraltar
Italy
Ukraine
Malta
Latvia
228 Playtech plc Annual Report and Financial Statements 2023
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Trading company for the Aristocrat Lotteries VLTs
Owns video slots intellectual property
Trading company for sports betting
Trading company for sports betting and provider of development services
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
Provider of marketing support services, software development and
support services
Develops software for fixed odds betting terminals and casino machines
(as opposed to online software)
Designs, develops and manufactures online software
Management services company
Software development and operational support services
Consulting and online technical support, data mining processing and
advertising services to Group companies
Mobile sportsbook betting platform developer
Operates poker community business
Italian retail betting market
Designs, develops and manufactures software
Retail and digital sports betting
Provider of live services to Group companies
Notes to the financial statements continued Financial Statements
Note 39 – 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.
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.
31 December 2023
Non-current assets
Equity investments
Derivative financial assets
Convertible loans
Trade receivables
Loans receivable
Current assets
Trade receivables
Loans receivables
Cash and cash equivalents
Non-current liabilities
Bonds
Lease liability
Contingent consideration
Current liabilities
Trade payables
Lease liability
Progressive operators’ jackpots and security
deposits
Client funds
Contingent consideration
Interest payable
Note
Measurement
category
FVTPL
21B
FVTPL
21C
22
FVTPL
23 Amortised cost
22 Amortised cost
23 Amortised cost
24 Amortised cost
25 Amortised cost
29 Amortised cost
19 Amortised cost
FVTPL
31
32 Amortised cost
19 Amortised cost
25 Amortised cost
25 Amortised cost
31
FVTPL
34 Amortised cost
Carrying
amount
2023
€’m
92.8
827.8
3.5
1.9
58.1
207.1
1.7
516.2
646.1
61.9
5.8
66.9
24.9
111.0
41.9
0.4
5.9
Fair value
Level 1
€’m
Level 2
€’m
Level 3
€’m
15.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
77.0
827.8
3.5
—
—
—
—
—
—
—
5.8
—
—
—
—
0.4
—
Playtech plc Annual Report and Financial Statements 2023
229
Financial Statements
Note 39 – Financial instruments and risk management continued
Financial instrument by category continued
Carrying amount
Fair value
Note
Measurement
category
2022
€’m
Level 1
€’m
Level 2
€’m
Level 3
€’m
31 December 2022
Non-current assets
Equity investments
Derivative financial assets
Trade receivables
Loans receivable
Current assets
Trade receivables
Convertible loans
Loans receivables
Cash and cash equivalents
Non-current liabilities
Bonds
Lease liability
Contingent consideration
Current liabilities
Bonds
Trade payables
Lease liability
Progressive operators’ jackpots and security
deposits
Client funds
Contingent consideration
Interest payable
21B
FVTPL
FVTPL
21C
23 Amortised cost
22 Amortised cost
23 Amortised cost
24
FVTPL
24 Amortised cost
25 Amortised cost
29 Amortised cost
19 Amortised cost
FVTPL
31
29 Amortised cost
32 Amortised cost
19 Amortised cost
25 Amortised cost
25 Amortised cost
31
FVTPL
34 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
—
The fair value of the contingent consideration 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 21C.
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:
230 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 39 – 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 €9.7 million (2022: €6.5 million). As at 31 December 2023, two customers had combined loans
and receivables outstanding of €139.7 million.
Cash and cash equivalents
The Group held cash and cash equivalents (before ECL) of €516.6 million as at 31 December 2023 (2022: €426.9 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 2023 is €0.4 million (2022: €0.4 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
At 31 December 2023
At 31 December 2022
516.6
426.9
337.0
214.2
179.6
212.7
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.
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 trade balances from related parties have also been included in the ECL assessment. 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.
As at 31 December 2023, the Group has trade receivables of €209.0 million (2022: €165.0 million) which is net of an allowance for ECL of
€6.8 million (2022: €4.5 million).
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 2023
Expected credit loss rate
Gross carrying amount
Expected credit loss
Trade receivables – net
31 December 2022
Expected credit loss rate
Gross carrying amount
Expected credit loss
Trade receivables – net
Total
€’m
Not past due
€’m
1–2 months
overdue
€’m
1.0%
62.9
(0.6)
62.3
4.8%
109.3
(5.3)
104.0
Not past due
€’m
1–2 months
overdue
€’m
3.0%
124.8
(3.7)
121.1
1.1%
27.2
(0.3)
26.9
3.2%
215.8
(6.8)
209.0
Total
€’m
2.7%
169.5
(4.5)
165.0
More than
2 months
past due
€’m
2.1%
43.6
(0.9)
42.7
More than
2 months
past due
€’m
2.9%
17.5
(0.5)
17.0
Playtech plc Annual Report and Financial Statements 2023
231
Financial Statements
Note 39 – Financial instruments and risk management continued
A. Credit risk continued
Trade receivables continued
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.
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
2023
€’m
4.5
2.3
6.8
2022
€’m
6.8
(2.3)
4.5
As of 31 December 2023, the Group has a significant concentration of trade receivables from a related party. The balance outstanding from
this related party represents 41% of the net trade receivable balance. This concentration of receivables from a related party exposes the Group
to concentration risk, as any adverse financial performance or inability of the related party to fulfil its obligations could have a material adverse
impact on the Group’s financial position, results of operations and cash flows. The Group believes that this amount is recoverable and expects
timely payment (refer to Note 7 for significant judgement made).
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 2023, the Group recognised provision for expected
credit losses of €2.5 million in profit or loss relating to loans receivable (2022: €1.6 million).
Balance at 1 January
Charged to profit or loss
Balance at 31 December
2023
€’m
1.6
0.9
2.5
2022
€’m
—
1.6
1.6
Furthermore, €3.0 million of an existing loan to Gameco was impaired during the year ended 31 December 2022 (refer to Note 21B).
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.
2023
Bonds
Lease liability
Contingent consideration
Trade payables
Progressive operators’ jackpots and security deposits
Client funds
Interest payable
Provisions for risks and charges
2022
Bonds
Lease liability
Contingent consideration
Trade payables
Progressive operators’ jackpots and security deposits
Client funds
Interest payable
Provisions for risks and charges
232 Playtech plc Annual Report and Financial Statements 2023
Carrying
amount
€’m
646.1
86.8
6.2
66.9
111.0
41.9
5.9
9.5
974.3
547.6
85.8
2.9
61.2
114.3
39.8
7.4
13.9
872.9
Contractual cash flows
Within 1 year
€’m
1–5 years
€’m
More than
5 years
€’m
Total
€’m
762.8
96.8
7.8
66.9
111.0
41.9
5.9
9.5
32.5
26.7
0.4
66.9
111.0
41.9
5.9
0.6
1,102.6
285.9
604.6
110.2
7.9
61.2
114.3
39.8
7.4
13.9
959.3
221.1
34.1
0.2
61.2
114.3
39.8
7.4
3.9
482.0
730.3
53.5
7.4
—
—
—
—
8.9
800.1
383.5
43.1
7.7
—
—
—
—
10.0
444.3
—
16.6
—
—
—
—
—
—
16.6
—
33.0
—
—
—
—
—
—
33.0
Notes to the financial statements continued
Financial Statements
Note 39 – 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 enter into foreign transactions, and when the Group holds cash balances,
in currencies denominated in a currency other than the functional currency.
31 December 2023
Cash and cash equivalents
Progressive operators’ jackpots and security deposits
Cash and cash equivalents less client funds
31 December 2022
Cash and cash equivalents
Progressive operators’ jackpots and security deposits
Cash and cash equivalents less client funds
In EUR
€’m
418.7
(140.3)
278.4
In EUR
€’m
338.5
(139.0)
199.5
In USD
€’m
11.2
(0.4)
10.8
In USD
€’m
5.8
(0.2)
5.6
In GBP
€’m
69.7
(12.2)
57.5
In GBP
€’m
60.2
(14.9)
45.3
In other
currencies
€’m
17.0
—
17.0
In other
currencies
€’m
22.4
—
22.4
Total
€’m
516.6
(152.9)
363.7
Total
€’m
426.9
(154.1)
272.8
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 2023, none of the Group’s borrowings are at a variable rate of interest (2022: Nil%).
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 2023
233
Financial Statements
Note 40 – Reconciliation of movement of liabilities to cash flows arising from financing activities
Balance at 1 January 2023
Changes from financing cash flows
Interest payable on bonds and loans and
borrowings
Repayment of loans and borrowings
Proceeds from loans and borrowings
Proceeds from the issuance of bonds
Repayment of bonds
Payment of contingent consideration
Principal paid on lease liability
Interest paid on lease liability
Total changes from financing cash flows
Other changes
Liability related
New leases
On business combinations
Interest on bonds and loans and borrowings
Interest on lease liability
Movement in contingent consideration
Foreign exchange difference
Total liability-related other changes
Balance at 31 December 2023
Loans and
borrowings
€’m
—
—
(77.4)
79.9
—
—
—
—
—
2.5
—
—
—
—
—
(2.5)
(2.5)
—
Bonds
€’m
547.6
—
—
—
297.2
(200.0)
—
—
—
97.2
—
—
1.3
—
—
—
1.3
646.1
Liabilities
Interest on
loans and
borrowings
and bonds
€’m
Contingent
consideration
and redemption
liability
€’m
7.3
2.9
(31.3)
—
—
—
—
—
—
—
(31.3)
—
—
29.6
—
—
0.3
29.9
5.9
—
—
—
—
—
(0.2)
—
—
(0.2)
—
0.4
—
—
3.3
(0.2)
3.5
6.2
Lease
liabilities
€’m
85.8
—
—
—
—
—
—
(23.1)
(5.2)
(28.3)
22.0
1.9
—
5.2
—
0.2
29.3
86.8
Total
€’m
643.6
(31.3)
(77.4)
79.9
297.2
(200.0)
(0.2)
(23.1)
(5.2)
39.9
22.0
2.3
30.9
5.2
3.3
(2.2)
61.5
745.0
234 Playtech plc Annual Report and Financial Statements 2023
Notes to the financial statements continued
Financial Statements
Note 40 – Reconciliation of movement of liabilities to cash flows arising from financing activities continued
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 and loans and 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
—
—
—
—
—
—
—
(1.0)
(1.0)
—
—
2.6
—
—
—
—
—
—
2.6
547.6
—
33.6
—
—
—
—
—
—
33.6
7.3
Contingent
consideration
and redemption
liability
€’m
11.0
—
—
—
(5.9)
—
—
(5.9)
—
—
—
(4.3)
(1.0)
2.9
—
0.2
(2.2)
2.9
Lease
liabilities
€’m
95.3
—
—
—
—
(22.5)
(5.7)
(28.2)
19.0
—
5.7
—
—
—
(4.7)
(1.3)
18.7
85.8
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
643.6
Note 41 – Events after the reporting date
Post year end, the Group entered into a new structured agreement with Tenlot El Salvador S.A. de C.V. (“Tenlot El Salvador”), which
has a licence to operate online betting and gaming on behalf of the national lottery of El Salvador. Under the agreement, the Group will
provide Tenlot El Salvador its technological platform, the operational services and related services, where it will receive in return standard
operator revenue and additional B2B services fee as per Note 10. The Group has no shareholding in Tenlot El Salvador. Playtech has paid
Tenlot El Salvador an amount of $2.3 million and will pay an additional $2.5 million upon certain conditions in exchange for an option to acquire
70% of the shares in Tenlot El Salvador. The option has certain exercise conditions. Playtech also made available to Tenlot El Salvador a
$5.5 million line of credit. As of the date of this report this amount remains undrawn.
Post year end, the Group formally concluded the extension of the exercise date in respect of the Wplay option (see Note 21C) to any date after
22 February 2025.
Post year end, the receivable in Note 7 in relation to Caliplay remains unpaid. In addition, further invoices totalling €35.8 million in relation to
B2B licensee fees and additional B2B services fee for January and February 2024 have been issued and remain unpaid.
Playtech plc Annual Report and Financial Statements 2023
235
Financial Statements
Financial Statements
Company statement of changes in equity
For the year ended 31 December 2023
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
Equity settled share based payment charge (Note 11)
Total transactions with the owners of the Company
Balance at 31 December 2022
Balance at 1 January 2023
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
Equity settled share based payment charge (Note 11)
Transfer from treasury shares to Employee Benefit Trust (Note 11)
Total transactions with the owners of the Company
Balance at 31 December 2023
Additional paid
in capital
€’m
Employee
Benefit Trust
€’m
606.0
(22.6)
—
—
—
—
—
606.0
606.0
—
—
—
—
5.8
5.8
611.8
—
—
5.4
—
5.4
(17.2)
(17.2)
—
—
11.9
—
(12.5)
(0.6)
(17.8)
Retained
earnings
€’m
656.2
(23.9)
(23.9)
(6.0)
8.3
2.3
634.6
634.6
(689.3)
(689.3)
(11.9)
6.3
6.7
1.1
Total equity
€’m
1,239.6
(23.9)
(23.9)
(0.6)
8.3
7.7
1,223.4
1,223.4
(689.3)
(689.3)
—
6.3
—
6.3
(53.6)
540.4
236 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Company balance sheet
As at 31 December 2023
Non-current assets
Investments in subsidiaries
Investments in associates
Derivative financial asset
Other investments
Trade and other receivables
Deferred tax asset
Other non-current assets
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
Current liabilities
Bonds
Trade and other payables
Note
2023
€’m
2022
€’m
7
8
8
8
9
9
10
11
14
13
13
14
1,647.9
49.8
4.8
14.6
67.0
—
0.3
1,784.4
9.4
26.7
36.1
1,208.7
35.0
1.4
—
770.5
23.4
0.3
2,039.3
14.8
2.5
17.3
1,820.5
2,056.6
611.8
(17.8)
(53.6)
540.4
10.3
646.1
656.4
—
623.7
623.7
606.0
(17.2)
634.6
1,223.4
9.4
348.0
357.4
199.6
276.2
475.8
TOTAL EQUITY AND LIABILITIES
1,820.5
2,056.6
The financial information was approved by the Board and authorised for issue on 26 March 2024.
Mor Weizer
Chief Executive Officer
Chris McGinnis
Chief Financial Officer
Playtech plc Annual Report and Financial Statements 2023
237
Financial Statements
Notes to the Company financial statements
Note 1 – General
The principal activity of Playtech plc (the “Company”) is the holding of investment in subsidiaries.
Note 2 – Basis of preparation
The financial statements have been prepared in accordance with FRS 101 “Reduced Disclosure Framework” and updated for amendments
issued subsequently.
The Company has taken advantage of certain disclosure exemptions conferred by FRS 101 and has not provided:
• a statement of compliance with IFRS (a statement of compliance with FRS 101 is provided instead);
• a statement of profit or loss and other comprehensive income as per the requirements of IAS 1 Presentation of Financial Statements;
• a statement of cash flows as per the requirements of IAS 1 Presentation of Financial Statements;
• disclosure of the effect of future accounting standards not yet adopted;
• disclosure of compensation for key management personnel and amounts incurred by the Company for the provision of key management
personnel services provided;
• additional comparative information as per IAS 1 Presentation of Financial Statements paragraph 38 in respect of reconciliation of the number
of shares outstanding at the start and end of the prior period; and
• disclosures in relation to the objectives, policies and process for managing capital.
In addition, and in accordance with FRS 101, further disclosure exemptions have been applied because equivalent disclosures are included in the
consolidated financial statements of Playtech plc. These financial statements do not include certain disclosures in respect of:
• share-based payments – details of the number and weighted average exercise prices of share options, and how the fair value of goods or
services received was determined as per paragraphs 45(b) and 46 to 52 of IFRS 2 Share-Based Payment;
•
•
financial instrument disclosures as required by IFRS 7 Financial Instruments: Disclosures; and
fair value measurements – details of the valuation techniques and inputs used for fair value measurement of assets and liabilities as per
paragraphs 91 to 99 of IFRS 13 Fair Value Measurement.
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 million, unless otherwise indicated.
Note 4 – Accounting standards issued but not yet effective
A number of new standards are effective for annual periods beginning after 1 January 2023 and earlier application is permitted.
However, the Company has not early adopted the new or amended accounting standards disclosed in the Group consolidated financial
statements in preparing these financial statements.
Note 5 – Material accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
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.
238 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Note 5 – Material accounting policies continued
Associates and equity call options
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 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 in profit or loss.
When potential voting rights or other derivatives containing potential voting rights exist, the Company’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 at fair value under IFRS 9. In the case where there is significant influence over the investment under
which Playtech holds the derivative financial asset this should be accounted under IAS 28 Investment in Associates. However, if the option is
not currently exercisable and there is no current access to profits, the option is fair valued without applying equity accounting to the investment
in associate.
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.
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.
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 at amortised cost
(i) 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.
Playtech plc Annual Report and Financial Statements 2023
239
Financial Statements
Notes to the Company financial statements continued
Note 5 – Material accounting policies continued
Financial assets at amortised cost continued
(ii) 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.
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.
(iii) 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.
(iv) 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.
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 Company operates in relation to
intercompany positions, the ECL is negligible because these balances are usually cleared, either through repayment or capital contribution.
For cash and cash equivalents, management has assessed that no impairment arises since they are held with banks under current
accounts and the Company has access to those funds at any time. The Company has also assessed whether an ECL on cash is needed
based on reviewing Moody’s ratings for each financial institution cash is held. As a result, the probability of default of each institution is
considered insignificant.
Financial assets at fair value through profit or loss
(i) Classification and measurement
Financial assets that do not meet the criteria for being measured at amortised cost or fair value through other comprehensive income are
measured at fair value through profit or loss. Financial assets at fair value through profit or loss are measured at fair value through profit or loss
at the end of each reporting period, with any fair value gains or losses recognised in profit or loss.
Financial liabilities
(i) 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.
(ii) 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.
(iii) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position 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 SPPI; and (ii) they are not designated at FVTPL.
240 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Note 5 – Material accounting policies continued
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.
Employee Benefit Trust
Consideration paid/received for the purchase/sale of shares subsequently put in the Employee Benefit Trust 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 investments were impaired, although further
disclosures are included below on two of the significant investments the Company holds. Note 7 provides further information on the
Company’s investments.
Investment in Playtech Holdings Limited and its relevant subsidiaries
The investment in Playtech Holdings Limited and its relevant subsidiaries of €907.4 million includes the Snai operations which comfortably
cover the investment value.
Investment in Playtech Software Limited
Playtech Software Limited (“PTS”) holds a significant number of key IP and major activities of the Group. On 21 December 2023 Playtech
Plc released and discharged PTS from its loan obligation of €948.6 million, which had a carrying amount of €352.3 million as a result of an
impairment of €596.3 million. This constituted a change of intention as at 31 December 2022 the Company had previously intended to net settle
the loan due from PTS and the associated payable to them.
The discharging of the loan increased the investment value in PTS by €352.3 million, which was deemed to be the cost of the additional
investment in PTS at the point the obligation was discharged. This resulted in an income statement charge of €596.3 million being the
difference between investment value and loan discharged. Following the discharging of the loan the carrying value of the investment in PTS
at 31 December 2023 was €512.5 million.
Management has assessed the increased investment cost and hence the carrying value of the investment at 31 December 2023 using 5-year
cash flow projections, taking the Company’s three-year plan and additional two years of forecasts. The recoverable amount of the investment
has been determined from value in use calculations, with appropriate capital expenditure, tax and net debt. The discounted cash flow model
also takes into account the availability of both recognised and unrecognised tax losses.
The recoverable amount which equalled the carrying amount of the investment of €512.5 million was determined using a discount rate of 15.9%,
with annual revenue growth rates of between 5.0% and 10.0% per year, a terminal growth rate of 2.0%, and average EBITDA growth rates of
15.0% over the forecast period. The carrying value is sensitive to movements in key assumptions, as follows:
•
•
•
if the revenue growth rate per annum is reduced by 1.0%, this would result in an impairment of €42.6 million;
if the discount rate increased by 1.0% to a post-tax discount rate of 16.9%, this would result in an impairment of €20.6 million; and
if the EBITDA growth rate per annum is reduced by 1.0%, an additional impairment of €7.8 million would be recognised.
Included in PTS are cashflows relating to Caliplay through recharges for use of IP to another Group company. Whilst the contract between this
Group company and Caliplay under which we are entitled to receive fees is expiring in 2034, and this was the base assumption in the cashflows
used in the impairment review, should there be material changes to the cash flows arising from the Caliplay contract this could potentially lead
to a material impairment in the Company’s investment in PTS.
Derivative financial assets
As per Note 21A of the Group consolidated financial statements, the Company holds an option to acquire further shares (up to 18.11%) in
LSports. The fair value assessment for this option falls under Level 3 of the fair value hierarchy. As such, the Company has used a model with
unobservable inputs for the valuation, which 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 for the LSports
option were determined based on the best information available and using the Monte Carlo simulation model. The fair value of the LSports option
at 31 December 2023 was €4.8 million (2022: €1.4 million).
Playtech plc Annual Report and Financial Statements 2023
241
Financial Statements
Notes to the Company financial statements continued
Note 6 – Critical accounting estimates and judgements continued
Estimates and assumptions continued
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.
Impairment of non-financial assets
Investment in associates
In assessing impairment of investments in associates, management utilises various assumptions and estimates that include projections of future
cash flows generated by the associate, determination of appropriate discount rates reflecting the risks associated with the investment, and
consideration of market conditions relevant to the investee’s industry. The Company exercises judgement in evaluating impairment indicators
and determining the amount of impairment loss, if any. This involves assessing the recoverable amount of the investment based on available
information and making decisions regarding the appropriateness of key assumptions used in impairment testing.
Deferred tax asset
In evaluating the Company’s ability to recover 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. The key items for which the reported tax charge
has been adjusted in 2023 are UK tax losses on which a deferred tax asset of €23.4 million was derecognised as expected utilisation would fall
outside the forecasting period and therefore there is not sufficient certainty they will be recovered.
Note 7 – Investments in subsidiaries
Investment in subsidiaries at 1 January
Additional capital contribution1
Additions in the year2
Employee stock options
Disposals3
Investment in subsidiaries at 31 December
2023
€’m
1,208.7
352.3
80.6
6.3
—
1,647.9
2022
€’m
1,201.4
—
—
8.1
(0.8)
1,208.7
1
2
3
On 21 December 2023 Playtech Plc released and discharged PTS from its loan obligation of €948.6 million, which had a carrying amount of €352.3 million. This loan arose following an internal
restructuring which resulted in the Group’s key operating entity transferring its business to PTS in 2021. As consideration for Playtech Plc releasing PTS from its obligations, PTS issued fourteen
ordinary shares to Playtech Plc at nominal value (€1 each). This increased the investment value held by Playtech Plc in PTS by €352.3 million, which was deemed to be the cost of the additional
investment in PTS at the point the obligation was discharged.
In March 2023, the Company acquired PT Holdings (Delaware) Inc from Playtech Services (Cyprus) Limited, another Playtech Group company, for a nominal amount of $8.0 being the net book value
of the shares at the time. Playtech plc then subscribed for additional shares in the newly acquired subsidiary for cash consideration of $85.0 million. On the same date, PT Holdings (Delaware) Inc
invested $85.0 million (€79.8 million) in Hard Rock Digital (HRD) in exchange for a small minority interest in a combination of equity shares and warrants.
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.
242 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Note 7 – Investments in subsidiaries continued
The details of the investments are as follow:
Name
Playtech Holding Limited
(ex. Playtech Software Limited)
Country of incorporation
Proportion of voting rights and
ordinary share capital held
Nature of business
Isle of Man
100%
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%
PT Holdings (Delaware) Inc
USA
100%
Holding company, transferred its activities in 2021 to Playtech
Software Ltd UK
Trading company for the Videobet software, owns the intellectual
property rights of Videobet and licenses it to customers
Management company
Holding company
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
Holds the Hard Rock Digital (HRD) investment and the
US subsidiaries including PT Services (Delaware) LLC
Playtech Retail Limited
British Virgin Islands
100%
Dormant company
Note 8 – Investments in associates, derivative financial assets and other investments
Investment in associates
The Company has the following investments in associates:
Name
Country of incorporation
Proportion of voting rights and
ordinary share capital held
Nature of business
LSports Data Limited
Israel
31%
NorthStar Gaming Inc.
Canada
27.5%
Sporting News Holdings Limited
Isle of Man
12.6%
Partners with sportsbooks to create engaging customer
offerings by utilising the most accurate real-time data on a
broad range of events
Offers access to regulated sports betting markets and robust
casino offerings and live dealer games
Specialists in selling digital advertising and inventory, offers digital
media services
Balance sheet
LSports Data Limited
NorthStar Gaming Inc.
Sporting News Holdings Limited
Investments in associates at 31 December
Profit and loss impact
LSports Data Limited
NorthStar Gaming Inc.
Sporting News Holdings Limited
Total share of loss from associates
2023
€’m
35.2
9.0
5.6
49.8
2023
€’m
2.1
(2.8)
(0.2)
(0.9)
2022
€’m
35.0
—
—
35.0
2022
€’m
(0.3)
—
—
(0.3)
Playtech plc Annual Report and Financial Statements 2023
243
Financial Statements
Notes to the Company financial statements continued
Note 8 – Investments in associates, derivative financial assets and other investments continued
Investment in associates continued
Movement on the balance sheet
Balance as at 31 December 2022/1 January 2023
Additions
Conversion of convertible loan to shares
Share of profit/(loss)
Dividend income
Balance as at 31 December 2023
LSports
€’m
NorthStar
€’m
Sporting News
Holdings Limited
€’m
35.0
—
—
2.1
(1.9)
35.2
—
3.4
8.4
(2.8)
—
9.0
—
5.8
—
(0.2)
—
5.6
Total
€’m
35.0
9.2
8.4
(0.9)
(1.9)
49.8
Note 21A of the Group consolidated financial statements includes all the information in relation to these investments.
Derivative financial assets
As per Note 21A of the Group consolidated financial statements, the Company holds an option to acquire further shares (up to 18.11%) in LSports.
The fair value of the option at 31 December 2023 was €4.8 million (2022: €1.4 million).
Other investments
In 2023, the Company acquired shares in a listed security for €14.3 million. The fair value of these shares is determined by reference to published
price quotations in an active market. In the year ended 31 December 2023, the fair value of these shares has increased by €0.3 million, to a total
of €14.6 million.
Note 9 – Trade and other receivables
Other receivables
Amounts due from subsidiary undertakings
Total non-current
Other receivables
Amounts due from subsidiary undertakings
Total current
2023
€’m
3.5
63.5
67.0
1.8
7.6
9.4
2022
€’m
—
770.5
770.5
9.8
5.0
14.8
During 2023, the Company impaired €1.3 million of receivables from PT Investments GC Inc. given that the latter company also impaired the
remaining part of its external receivables (2022: impairment of €2.4 million).
During 2023, Playtech plc released and discharged Playtech Software Limited (“PTS”) from PTS’s obligation to pay to the Company an amount
of €948.6 million, which was a net receivable created following an internal restructuring which resulted in the Group’s key operating entity
transferring its business to PTS in 2021. As consideration for Playtech plc releasing PTS from its obligations, PTS issued 14 ordinary shares to
Playtech plc at nominal value (€1 each). This increased the investment value held by Playtech plc in PTS by €352.3 million, which was deemed
to be the cost of the additional investment in PTS at the point the obligation was discharged.
The total non-current amount due from subsidiary undertakings at 31 December 2022 of €770.5 million included the receivable of €948.6 million
which was netted off by a payable to PTS of €179.5 million at 31 December 2022. As at 31 December 2022, it was expected that this amount
would be settled net. The payable amount of €179.5 million has decreased to €167.7 million at 31 December 2023 and is now included
in current liabilities.
Included in other receivables at 31 December 2022 was a convertible debenture of C$12.25 million (€8.4 million) issued to NorthStar Gaming
Inc in 2022 that subsequently converted to equity and warrants in 2023 following NorthStar’s reverse takeover (the “RTO”) of Baden Resources
Inc. A new convertible loan was issued to NorthStar in 2023 of C$5.0 million (€3.4 million). The fair value of the convertible debenture was
assessed as being materially in line with its face value at 31 December 2023. Refer to Note 21A of the Group consolidated financial statements
for further details.
Finally, in March 2023 and following acquisition of PT Holdings (Delaware) Inc from Playtech Services (Cyprus) Limited, the Company was also
assigned by Playtech Services (Cyprus) Limited to the rights of a $35.3 million loan receivable due from PT Holdings (Delaware) Inc bearing
interest at 4% repayable on or prior to 30 April 2029.
244 Playtech plc Annual Report and Financial Statements 2023
Financial Statements
Note 10 – Cash and cash equivalents
Cash at bank
Note 11 – Shareholders’ equity
Please refer to Note 27 of the Group consolidated financial statements.
Note 12 – Loans and borrowings
Please refer to Note 28 of the Group consolidated financial statements.
Note 13 – Bonds
Please refer to Note 29 of the Group consolidated financial statements.
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
2023
€’m
26.7
2022
€’m
2.5
2023
€’m
5.7
47.4
575.7
5.2
634.0
2023
€’m
10.3
623.7
634.0
2022
€’m
6.6
37.9
234.4
6.7
285.6
2022
€’m
9.4
276.2
285.6
In 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 21A of the Group consolidated financial statements for details of the acquisition.
In March 2023 and following acquisition of PT Holdings (Delaware) Inc from Playtech Services (Cyprus) Limited, the Company was also
assigned by Playtech Services (Cyprus) Limited to the rights of a $35.3 million loan receivable due from PT Holdings (Delaware) Inc bearing
interest at 4% repayable on or prior to 30 April 2029. As a result of the transfer, a respective loan payable due to Playtech Services (Cyprus)
Limited was created bearing interest at 3.5% also repayable on demand.
Finally, to easily facilitate the bond interest repayments and other outstanding debt requiring settlement, an intra-group facility agreement was
introduced with Playtech Services (Cyprus) Limited, whereby the Company has the ability to draw down an aggregate amount of maximum
€150.0 million. The loan bears interest at the rate of 5.3% and is repayable upon demand. As at the reporting date, the credit facility drawn
amounted to €123.2 million.
Playtech plc Annual Report and Financial Statements 2023
245
Financial Statements
Five-year summary
Income statement
Total revenues from continuing operations
Adjusted EBITDA from continuing operations
Adjusted 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
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
2023
€’m
1,706.7
432.3
156.8
2,475.9
830.6
19.3
597.7
920.9
1.0
1,806.2
2022
(Restated)
€’m
1,601.8
395.4
160.5
2,300.8
703.5
19.6
755.4
565.0
1.0
1,702.5
2021
€’m
1,205.4
317.1
127.6
2,300.5
845.9
507.4
490.3
1,236.0
344.8
1,582.7
611.8
606.0
606.0
0.4
(17.8)
—
(7.4)
1,219.2
—
51.7
50.2
0.4
(17.2)
—
0.3
1,113.0
—
53.5
51.5
(0.5)
(23.2)
(3.7)
(22.7)
1,026.5
0.3
42.8
40.9
2020
€’m
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
9.2
8.8
2019
€’m
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)
45.5
44.6
—
370.0p/634.5p
—
390.8p/731.5p
—
351.0p/770.0p
—
140.3p/424.3p
18.1
360.5p/457.7p
246 Playtech plc Annual Report and Financial Statements 2023
Company Information
Company Information
Company information
Registered office
Ground Floor
St George’s Court
Upper Church Street
Douglas
Isle of Man IM1 1EE
Corporate brokers
Goodbody Stockbrokers
49 Grosvenor Street
London W1K 3HP
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Communications adviser
Headland PR Consultancy LLP
Cannon Green
1 Suffolk Lane
London EC4R 0AX
Legal adviser
Bryan Cave Leighton Paisner LLP
Governor’s House
5 Laurence Pountney Hill
London EC4R 0BR
Registrars
Computershare Investor Services (Jersey) Limited
13 Castle Street
St. Helier
Jersey JE1 1ES
Playtech plc Annual Report and Financial Statements 2023
247
Financial Statements
Notes
248 Playtech plc Annual Report and Financial Statements 2023
Playtech plc’s commitment to environmental issues is reflected in this Annual Report, which
has been printed on Symbol Freelife Satin and Arena Extra White Smooth, 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
have been used and 99% of dry waste is diverted from landfill. The printer is a CarbonNeutral®
company. Both the printer and the paper mill are registered to ISO 14001.
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