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How many goals does Hristo Stoichkov have for Barcelona ?

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How many goals does Hristo Stoichkov have for Barcelona ? | Yahoo Answers

. He made 77 during his first stint at Barcelona (1990-1995) and 7 more when he came back from 1996-1998.

How many goals does Hristo Stoichkov have for Barcelona ?

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Best Answer:  Hristo Stoichkov made a total of 84 goals for Barcelona

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How To Pick Your Lucky Numbers And How To Use Them

Then one day she was in a car accident and was hospitalized and she was unable to get her lottery ticket, and 4 out of 6 of her numbers were picked. I actually meet someone who wrote numbers from 1 to 99 on little pieces of paper and picked 6 numbers from the hat. For example if your birth date is 11-05-1971 you may use 11-05-19-71. There are many different games and the more they cost the less numbers you get to choose but the jackpots can be anywhere from 1 to 5 million dollars.

Unlike the lottery in keno you can pick your lucky numbers and pay for multiple games, instead of having to fill out a form for each game. She would not have won millions but it could have been worth a few hundred had she been able to buy her lottery ticket that week.

Make sure to play your lucky numbers every week. You can also play lottery type games in casinos and online casinos. its called Keno, and it is exactly like the lottery except instead of once or twice a week a new game starts every 5 minutes 24 hours a day 7 days a week.

With all the people in the world you would think there would be millions of different ways to pick your personal lucky numbers, but most people actually do the exact same things to pick their lucky numbers.

Besides writing online casino reviews Lindsy Jackson is an astrologist and gives people their lucky numbers and their horoscopes for gambling.. Later you can return to the keno area and they can run your ticket thru the computer and pay you for any wins you may have had. She played those numbers for years. The chances of you winning increase every time you play your lucky numbers because chances are you are closer to them winning then the time before.

Another popular way to get your lucky numbers is to read your weekly horoscope. This can usually be found in your local newspaper, but if you do not get the paper or your paper does not offer you horoscopes or lucky numbers then you can check them online.

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The most common way to pick your lucky numbers is to pick your birth date and the dates of your friends of family. Then you are free to go about your business in the casino maybe play some table games or the slot machines. These people are the most likely people to play the lottery.

Lottery players will come up with what they feel is their lucky numbers and they will play them every week in hopes of one day winning the lottery and making all their dreams come true.

Now that you have your lucky numbers here are some tips on how to improve your chances of winning.

By: Lindsy Jackson

Don’t just play them in the state lottery. Parents will usually use the dates of their children.

Many people have jobs they hate or they love their jobs but they do not get paid very much. As a matter of fact the odds of winning the jackpot at keno are much higher then in the state sponsored lottery.

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Research and Markets: iGaming Business Directory – 2015 Edition

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A directory of more than 1,000 affiliate sites is incldued with game verticals, traffic rank, language, geographic focus and owner.

Companies Mentioned: 30 of the 200+ Companies Featured

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DUBLIN–(BUSINESS WIRE)–Research and Markets (http://www.researchandmarkets.com/research/lxm8fl/igaming_business) has announced the addition of the “iGaming Business Directory – 2015 Edition” report to their offering.

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Electronic Music Merges with Symphony in Upcoming Album and Concert: Electronic Opus | Reuters

The Kickstarter

runs through December 10, 2014.

“This collaboration is an acoustical merging of tradition and

technology, not simply symphonic versions of popular EDM songs,” says

Tommy Tallarico, creative director and executive producer, Electronic

Opus.

Electronic Music Merges with Symphony in Upcoming Album and Concert:

Electronic Opus

Multi-Platinum EDM Recording Artist BT Joins Composer and Producer

Tommy Tallarico to Blend EDM and Symphonic Orchestrations for New Music

Projects; Kickstarter Effort Launches Today

Start with the power and excitement of an electronic dance music (EDM)

performance, blend in the emotional and classical tones of a symphony

orchestra, and the result is Electronic Opus, a

first-of-its-kind, high-energy album and live concert experience

arriving in March 2015.

Combining the talents of multi-platinum EDM recording artist, film

composer, and technologist Brian Transeau (BT) and the award-winning

composer and Video Games Live creator Tommy Tallarico, Electronic Opus

features BT’s signature EDM hits re-imagined, re-arranged and remixed

with a full orchestra. For the last 10

years, he has been touring his worldwide multimedia symphonic show,

Video Games Live, considered to be one of the most successful live

symphonic multimedia touring shows.

TanZ is creating novel experiences to connect audiences with creators. Visit www.electronicopus.com

for details. The album will feature new hybrid symphonic

electronic arrangements of BT’s greatest and most popular hits over the

past 25 years, including Skylarking, Flaming June, Dreaming, and more.

Electronic Opus: The Concert

The multimedia live concert event will feature BT accompanied by a

42-piece orchestra. Produced by BT, Tallarico, and TanZ Group, the

Electronic Opus album arrives on March 29, 2015. “They

don’t believe that people who listen to electronic music would fully

appreciate the symphony experience and vice versa, but we’re about to

prove them wrong with Electronic Opus.”

Electronic Opus: The Album

Electronic Opus will showcase BT’s ultimate talents as a classically

trained musician and composer with a unique focus on merging technology

and music production. From intimate fireside

chats and large speaking engagements, to one of-a-kind performances,

TanZ facilitates unique and long-lasting relationships between engaged

audiences and their favorite artists.

For more information about Electronic Opus, visit www.electronicopus.com

or www.facebook.com/ElectronicOpus2015,

or follow on Twitter @ElectronicOpus.

Zebra Partners

Sean Maggard, 512-387-4031

sean@zebrapartners.net

. Future tour dates will be announced at a later date.

Electronic Opus: The Team

Electronic Opus is produced by BT, Tommy Tallarico, and TanZ Group.

American music producer, composer, technologist, audio technician,

multi-instrumentalist, singer, and songwriter, BT is known as a

master-craftsman of all disciplines. Seeking a goal of $200,000 to fund the

album recording session with a full orchestra, the Kickstarter campaign

features an impressive collection of rewards levels for fans, ranging

from a signed copy of the album, to the exclusive album release party in

Hollywood, to a personalized song composed by BT. The live concert

experience kicks off on the same date at Miami’s Adrienne Arsht Center

for the Performing Arts during the Miami Winter Music Conference.

Starting today, fans can directly support this new musical endeavor via

the Electronic Opus Kickstarter. “This ‘electronic symphonic’ collaboration reinvents what a 21st

century symphonic experience can be: incredible high-energy, melodic

electronic music from one of the top artists in the field blended with

the artistic and cultural merits of a full symphony.

TanZ collaborates with the most innovative artists to integrate their

creative vision into events around the world. An artist in the electronic music

genre, he is credited as a pioneer of the trance and intelligent dance

music styles that paved the way for EDM. A Grammy Award nominee, BT has

produced, remixed, written for and collaborated with a variety of

artists, including Paul van Dyk, Peter Gabriel, Tori Amos, Depeche Mode,

Sting, The Roots, Madonna, and Tiësto, and composed original scores for

films such as Go, The Fast and the Furious, and Monster.

Creative Director and Producer Tommy Tallarico is one of the most

successful video game composers, known for creating unique audio

landscapes that enhance the video gaming experience. In addition to singing, multiple instruments and

BT’s well-known DJ skills, the show will include exclusive synchronized

HD video footage and music arrangements, hyper-synchronized lighting and

FX, special musical guests, and unique interactive segments to create an

explosive one-of-a-kind entertainment experience. Electronic Opus

will dazzle and entertain music lovers of all ages.”

“Whenever we would bring up this idea with record companies and

executives, they would never take us seriously,” explains BT. Tickets for the Miami

concert go on sale on December 1

Popular Children’s Web Site Under Attack by Identity Thieves

Odds are … Don’t just let them go out there and think everything will take care of itself and [that] your kid is smarter than a scammer. “You wouldn’t have sent [Little House on the Prairie author] Laura Ingalls Wilder out in the middle of the night to fetch water from the river. Something terrible could have happened to her.

But Neopets has been hit by Internet pirates, according to Christopher Boyd, director of malware research at FaceTime Communications Inc., a California-based Internet security company.

“People come up with the scams randomly,” he says. “Hearing about this scam makes me think I should be monitoring him more closely — or avoid ‘kid-safe’ community Web sites altogether.”

Or, as Land puts it: “Being a cool, passive parent has never been so uncool.”

“Neopets values the security of our users and educates them about these types of scams. Devious software can sniff out passwords stored in browsers or word documents on a computer that hold personal information, and then pass this data along.

While security firms like NCX and Symantec, which makes the well-known Norton anti-virus line of software, are always trying to improve their technology to combat the changing threats, it’s an arduous and nebulous task.

The scam takes advantage of kids willing to pay big for a “magic paintbrush,” the rare and pricey item that lets kids change their pets’ colors.

Boyd, who blogged about the problem last week, says such ploys of offering “something for nothing,” whether it’s free gaming software or Web design software, all follow the same basic principles.

Not only does the child never get the anticipated paintbrush, the malicious software then is in place to wreak havoc with his or her parents’ financial data by culling private information from the now-infected PC.

o Got tech questions? Ask our experts at FoxNews.com’s Tech Q&A.

o Click here to visit FOXNews.com’s Cybersecurity Center.

“Shining a light on these corners of the Web tends to make them scatter,” he says.

Boyd heard of the scam when a friend’s child, a Neopet user, was sent the message and the parent asked Boyd to check it out.

“The Internet is very much the Wild West,” says Land. We aggressively investigate all reported instances of social engineering, phishing and any other attempts by malicious individuals to deceive Neopets members.”

“I think it’s despicable that someone would target little kids, but unfortunately, I’m not entirely surprised,” comments Tela Durbin, a 33-year-old advertising copywriter in Cincinnati who blogs for the Working Moms Against Guilt Web site.

Cara Reeves, a 32-year-old advertising copywriter in Cincinnati, has a 6-year-old who’s a big fan of Webkinz, a Web site similar to Neopets, and was shocked to learn that her children could become targets of scammers.

A Web of Deceit

Once a curious surfer clicks on the link and downloads the malware, his PC is compromised, and the information on it is “sent back to base” for the bad guys to use as they choose, says Boyd.

They’re sent a seemingly innocuous e-mail or private message on the Neopets bulletin boards telling them about a secret Web site (Neopets does not let users copy and paste links) that will let them make their own magic paintbrushes — without having to spend precious points for them.

Still, says Boyd, bringing attention to this particular scam means the bad guys will have to go back to the drawing board.

Passwords to banking sites, account information, Social Security and credit card numbers all become fair game.

While social networking sites such as MySpace, Facebook and Neopets spell out conditions against such practices and publicly warn users of the potential threats of infiltration, it’s really up the user — or the user’s parents — to watch out for sinister pop-ups and e-mails, says Boyd.

Nearly half of players are between the ages of 8 and 12, although some are as young as 6, and they communicate with each other while at play.

“The blog post by Mr. And the outcome could be absolutely devastating.”

“The bigger issue with [the Neopets-based scam] is the botnet aspect of it,” says Michael Fitzpatrick, CEO at NCX Group Inc., a California-based information risk management firm.

Kelly Land, a stay-at-home working mother from Asheville, N.C., points out that it’s best to always be on your guard.

“We have to get better on the defense each year,” says Fitzpatrick. “It’s up to the people to monitor these things.”

“It’s the same with your kid. Boyd was not an indictment of Neopets security practices, but rather one example of a ‘social engineering’ scam used by third parties to lure members of community websites to unaffiliated websites where they may be deceived into providing user name and password,” Viacom said in a statement.

Another security expert isn’t surprised by the scam.

For its part, Viacom says it is investigating.

But when the child browses to that third-party Web site, which may be spoofing the official Neopets look and feel, he or she is not actually downloading and installing a magic paintbrush, but malware — software created to damage or penetrate a computer system.

Symantec’s Merritt says parents need to keep tabs on what their kids are doing online — even if it’s a reputedly rock-solid safe site like Neopets.

“When your children are using social networks, remind them to be careful about who they add as a friend, show them how to set privacy settings to keep private information and photos away from the public, and make sure they know not to click on links or programs sent to them, even by their friends,” she says.

The installed malware, explains Fitzpatrick, not only steals personal data — it also lets the hacker “herd” the infected PC into a “botnet,” a giant Internet-based virtual computer that can be used to send spam e-mail, attack other Web sites or pump out more malware, all without the rightful owner’s knowledge.

.

“Cybercriminals are looking to attack people where they gather and where they feel safe — and that defines our online social networks,” says Marian Merritt, Norton Internet Safety Advocate at Cupertino, Calif.-based PC security giant Symantec.

“The overall aim is hoping a child’s parent does [online] banking,” says Boyd, a security expert. they are not. Owned by the media giant Viacom, Neopets lets its members — roughly 25 million people — “adopt” cyber pets and earn points by playing games to purchase items for them.

“Although I’m usually in the same room or nearby when he’s playing, I know he could easily click on something without my knowledge,” she says. “It’s a process that never stops.”

You can take candy from a baby in cyberspace — and it’s enough to make a grownup cry.

The popular Web site Neopets has a reputation for being kid-friendly and kid-safe. “The child is being used as a launch pad to get to the parent.”

The threat of malware isn’t just isolated to one hacker stealing one person’s information, say security experts

Hot List: Hollywood’s Top Tech Temptresses | Slideshow

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‘Survivor: Cagayan’, Episode 10 analysis: Seven remain, who will win the game? – National Survivor

He is assuredly one of the most deserving players remaining, given his incredible journey to the finish line.

Be sure to watch the day-after interview with Jeremiah as well as his arrival at Ponderosa.

Trish. But there is still hope for Kass in one scenario: If she can get to the end with Woo and Jefra, I think Kass can win. But Kass would easily be able to show her credentials off at a Final Tribal Council, over the likes of Woo or Jefra. But it sure is a game-changer to re-introduce it now. There are simply too many other big targets remaining in the game, so Trish may very well find herself at the end…so who she sits with will be key to her chances.

And be warned: Spoilers from this week’s episode are to follow.. Discounted as being an unpredictable flip-flopper, “Chaos Kass” is probably a long-shot to win, but I still see some scenarios where it could happen. Against Jefra, only perhaps a few of her Beauty tribe mates would vote for her to win. Sure, she’s the sole Beauty left in the game, with three of her former tribe mates already on the jury, but I don’t see many others voting for her to win. There are now seven people left in the game and one of them will be crowned the Sole Survivor. In a season of unpredictable finishes, Kass winning Survivor could be the cherry on top.

Woo. Trish seems like someone Tony may legitimately want to sit next to at the end and if the jury does become bitter enough where they vote against Tony, it is likely Trish may be the beneficiary of much jury love. She just won her second straight Immunity Challenge and she is very well-liked socially. She has an uphill battle for these reasons. The big question is whether or not Tony’s aggressive style of play could win him the game, or if it will just go to piss off the jury one member at a time. Her “under-the-radar” approach may not sit well with some and she lacks a “big move” at this point, but if she can take out Tony sometime soon, that could be her “big move” in the game that wins her some jury votes. She most definitely can make it to the end, but even that looks unlikely now that she’s landed on Tony’s hit list.

Kass. His best chance of winning the game is if he is able to win Immunity from here on out…a highly unlikely scenario. Tony’s new-found Idol prevents this from being likely though. The popular and most obvious pick at the moment is Tony, whose chances just increased tremendously after finding the “Special Idol” this week. In that scenario, you would have a jury full of people that at least talk like they respect the game (Spencer, Tony, Tasha, to name a few). Sure, she’s not all that well-liked by the jury. Woo could get a vote or two from his former Brawns. Trish is also an interesting choice and definitely has a shot at winning. Speaking of big targets remaining in the game, you’ve got to love Spencer. Tasha is a very interesting threat to win the game, despite the fact that she remains on the outs of the power alliances in the game. Let’s take a look, shall we?

Jefra. Because if he doesn’t, even if the other alliance blows up, who would want to sit next to Spencer in the end? If by some stretch of fate he does get there though, look out. She is also smart to keep in cahoots with Tony, the much bigger target who will ultimately take any potential targets off of her back. Can he make it to the end? Sadly, it’s incredibly unlikely, despite how good of a player he is. But per norm, not all seven stand an equal chance at the coveted title and million dollar prize. He makes big moves for the fun of the game, not because he loves watching others suffer. Unlike Russell Hantz – whom Tony is often compared to – Tony seems to possess more likeability. We might have found the answer to that question tonight, when Spencer, Tasha and Jeremiah all claimed they would vote for Tony to win should he make it to the end. And sure, she might have a clear path to the end, because most others may want to be sitting next to her. Sure, he’s likeable and could perhaps go on an Immunity Challenge run, but put Woo alongside any other two, in any combination, and it seems like there is no likely scenario where he wins. Sure, she flipped. She is well-liked and strategic enough to understand what’s going on around her. The Idol’s “special” power of having the ability to be played after votes are read isn’t entirely new: Long-time fans may remember that this is how the hidden Idols worked back on Survivor: Panama and Cook Islands (Season 12 and 13, respectively). As Tony becomes more and more unlikeable towards the end, if Kass were the one to end his time in the game, she could win major brownie points and that would mark her second huge move in the game. Being the under-dog for much of the game has led to him becoming a fan-favorite as well, as everyone loves the underdog. Be sure to watch the episode in case you missed it, and be sure to get caught up with the full Episode 10 recap.

Tony. Woo is perhaps the one person remaining in the game that has zero chance of actually winning.

So as we near the May 21 Finale, who is in the best position to win the game? If anything, this season has proved that it is entirely unpredictable. All of the other players would be foolish to take Tony to the end with them, so Tony’s fate may rest in his ability to pull out a few Immunity Challenges down the stretch…and that’s one area of the game that Tony has shown weakness.

Also, make sure you check out one of my favorite Survivor sites, Survivor Fever.

Spencer. And if she were at the end against Tony, Spencer, Tasha or even Trish, yes, it would seem almost impossible for her to even get one vote to win the game. The others would be stupid to not vote her out the first chance they get and even her one remaining close ally in the game, Spencer, is too strategic-minded to want to sit next to Tasha in the end. You heard it hear first: Kass can win Survivor. We now know that Tony has a “get-out-of-jail free card” to use at his disposal, even though it’s a near certainty that he won’t be able to use the Idol at the Final Immunity Challenge at Final Four. Let’s face it, Jefra has been given the “follower” edit and if tonight’s episode was any indication, she will never win over the final jury due to her wishy-washy strategic game. There is time for some moves to be made, but his gameplay thus far hasn’t given us any reason to think he is on the verge of a game-shaking alteration of strategy.

Be sure to subscribe to this column (above by my name) to receive email alerts of new postings, as you will not want to miss my exclusive one-on-one interview with LJ on Thursday!

Tasha. So Tasha will have an extremely tough time getting to that Final Three…but if she does, she is one of the best bets to win the game.

It’s very hard to believe that we’re now 10 hours into Survivor’s 28th season, but after Wednesday night’s episode of “Survivor: Cagayan,” we are inching closer to crowning yet another winner. His path to the end is by far the most challenging at this point. Not only has he played an awesome, strategic game, he’s definitely one of the stand-out “All-Stars” of this season. But that being said, there are certainly some favorites, some long-shots and then those that really have zero chance at winning the game. So don’t discount Kass just yet. She is definitely one to watch and someone who has a great shot at Final Three

Casino-Gaming :: Mobile Casino Bonuses For The Players On The Go

Online mobile casino bonus is meant to attract the gambler to the circuit like the days of old. Instead of the internet which has a larger computer or laptop screen, you get it on the smaller screens of mobile phones. Depending on the type of phone you use, you just click the button of the link to access the site. Among the games a player would find classic casino games as well as new games. Earlier, the traditional brick and mortar casinos offered free drinks and meals to entice the gambler, but with the arrival of cell phones, mobile casino bonuses have come to stay.

On your mobile phone the various color displays may not be there, but the information is useful anyway as you get regular updates. Some of the mobile casino operators would be happy to offer mobile poker games, sports betting on the go as well as mobile betting.

. Mobile casino bonus websites also feature a variety of news on gambling, reviews of features provided by casinos, poker rooms, bingos and casino bonus promotions. You can play for fun or may want to make some extra money; you will get the casino bonus promotions online as usual. Some may look very attractive but may have strings tied to them.

There are many casino websites all over the internet that offer mobile casino bonus for the gambler who is busy and wants to be posted about the offers regularly.

With the rise on the number of online casinos, the need for keeping the gambler updated with the latest offers has become necessary. You can use the same account you use for internet wagers to get to access all the information as well as the bonuses on offer. With competition among casinos growing, gamblers can access online casinos from their mobile phones and get regular updates on mobile casino bonus.

You have to be a prudent and experienced gambler to get to know all about the importance of mobile cash bonuses as there are many hidden secrets behind them. Again, there are online sites that have the necessary facilities for sports betting and you get updated with daily schedules on your mobile phone.

Mobile casino bonuses are vital for the gambler on the go as updated information is essential for placing wagers. You would be able to figure out which ones is sticker and which ones are less sticky. Besides of the mobile bonus promotions these mobile casinos are offering mobile casino games matching online casinos. There are several of the websites from which you can choose which mobile cash bonus suits you best. With the updates on the mobile casino bonus, you can plan your wager accordingly.

You not only get mobile casino bonus information, but also your account balance and they are all easily accessible. You can now use the information sent by online casinos to plan your wager on the go. As the links are available online and it depends which ones you want to access, it is best to go through them on your mobile phone to get the best mobile casino bonus. Through the WAP or Wireless Application Protocol meant for the mobile or cell phone services to get wireless and telephony services delivered, the gambler remains constantly updated

Pinoy Style SEO

Corp. Becoming a very fast phased industry, outsourcing SEO companies set justifiable cost. While a bit of pressure is great for moving a project along, freelance markets can provide a tenuous lifestyle for even the best webmasters or developer. and is working double time on outsource search engine optimization.

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By Paul Jyron D.

Author’s Bio: 

Agents of Value is located in the Philippines, which means you get an educated staff at a very cost effective price. – being the first Webmaster Staffing Company in Iloilo has proven a name not only here but also abroad. IT (Information Technology) Industry has phased in and local Filipino talents were utilized since IT became a very in demand course in the last 4 years. Agents of Value aka Eversun Software Phil. In particular, there are a few major problems that come from working with freelancers. This is even better than finding someone over Freelance or Rentacoder. A full time agent starts at just $625 per month. Driving traffic through links, clicks, that’s how outsourcing SEO converts site visits into cold hard cash. Agents of Value have gained the trust of clients in Spain, Australia, Germany, Canada and some on the local proximity.. The requirements of running an online business tend to be ongoing. It’s human nature to seek for security. Many SEO companies like MBSTek in Manila, Syntactics and Harvest SEO in Cagayan de Oro, SEO Global Pro in Cebu and BHIPro in Davao, to name a few – goes to show that the industry is growing and that businesses are recognizing the need for SEO and PPC (pay-per-click) services.

Now, SEO set trend in Iloilo City which was entitled to be the next Metro Manila. Another scenario, freelancers work unpredictable schedules and may not have the appropriate tools or work environment.

Paul is a 22 year old link builder from Eversun Software Phil. Andonaque

Benj Arriola – a Filipino in San Diego, California was hailed champion in the SEO World Championships. While a freelancer if finishing your project, they are already thinking about where their next project is coming from. This surely gave Philippines a distinguishing mark in terms of SEO (search engine optimization) skills and because of this many SEO servicing companies have been organized in the county

Top 5 Betfair Horse Racing Trading Tips For Beginners

Now, this bettor who has placed the large bet, takes these back bets, lets it run for a little while, then places a series of large lay bets, forcing the price back out. This is where you place your bet – a lay stake at 13.0 to 13.5. If the market does move against you it is still easy enough to close out for zero loss. Fact. You now place bets at 7.2 and 7.4, meaning you in essence control both sides of the book and it’s very likely both sides will be taken, leaving you with a small profit. While not as useful a tool as it once was, exploiting “gaps” can still be a very profitable addition to any betting system. This is something to watch out for when following Tip 1 on this list. If you place a bet and the market moves against you, don’t hold on and on, hoping it will come back into profit, eventually letting the race start – you will end up losing a large chunk of cash. This is more suited to Irish racing, where there is lower liquidity, meaning price movements are far more pronounced. It’s probably a good idea to trade horses with prices between 10.0 to 17.0 to start with, as at these levels the market is easier to “read”. This is much easier to do using the “Ladder” interface view on Gruss or Bet Angel. Well, here are my top tips on how to “read” the pre-race horse racing markets and as such start to make a profit, while minimising the potential for losses.. You can also “feel” that the market isn’t moving as it should, as the back bets are often gobbled up faster than you would expect.

1) Follow The Money. Horse racing prices move where the money dictates. I know I did, but it is a stupidly risky thing to do and should be avoided at all costs.

4) Look Out For “Spoofers”. Now, I understand that many of you will ignore this. The trick is to watch for the build up of these positions – comes with practise – and dip in ahead of them, then ride the price movement to a nice profit.

2) Look Out For “Gaps” In The Market. If there is a significant amount on the back side of the book, the price is going to ger shorter (get lower). 3) Speculate On Large Price Movements. Essentially, what you need to look out for are two empty price increments. Indeed, how you take your losses – and there will be some – is just as important as making the wins count. Simply take the loss and move on. If you lose, don’t let it upset you, simply forget about it and move on to the next race…

For instance, Horse A is running in the 5:10 at Galway. This can of course be repeated until the market catches up.

It’s worth pointing out that these types of bet can take some time to be filled, and practise is needed if the price starts bouncing around. This tip involves looking for large gaps in the market, seeing where money has been taken (a feature of the betting software) and placing your bet accordingly. This will cause a number of traders to pile in ahead of it (following the money), forcing the price down. Consistency is the key.

With practise, this technique is relatively easy to spot, as spoofers tend to use far larger sums that is usual on Betfair. Nonetheless, this is one of the more fullproof ways of making small, consistent profits.

Alright, so you’ve got yourself a Betfair account, you’ve downloaded Bet Angel or Gruss as your betting interface, had a little dabble, but still aren’t sure what you need to be looking for in order to start making some money. And it’s tax free. Its price is 12.0 on the lay side and 20.0 on the backside. Certainly I got caught out a number of times when I first started. Similarly, if there is a large amount on the lay side, the price is likely to go out (get higher).

For example, you see Horse A is trading at 7.0 on the lay side and 7.6 on the back side. If it gets taken, you then place a back bet at anywhere between 16 and 18, and if that gets taken you secure a nice profit. This is when the action starts and liquidity markedly increases. You notice that there have been a few nibbles at around 13.0.

5) DO NOT, UNDER ANY CIRCUMSTANCES, LET YOUR BET GO IN-RUNNING. Note also that making around £2 to £3 per race would give you a profit at the end of the day of around £50 – not bad for a few hours work. This causes all the traders who got in thinking they could ride the back side to jump ship, forcing the price out even more as each one fights to minimise their loses.

Essentially what happens is a bettor on Betfair will place a large bet on one side of the book – let’s say it’s on the back side, as that is the usual scenario (although it does happen frequently both ways).

Just a few pre-tips beforehand: The best time to trade a race is around 10 minutes before the off

REG – Playtech Limited – Final Results | Reuters

§ The royalty rate was based on a third party market participant assumption for use of the IP Technology, considering market competition, quality, absolute and relative profitability.

Depreciation is calculated to write off the cost of fixed assets on a straight line basis over the expected useful lives of the assets concerned. When taken together, these represent a cash conversion rate of 87% from adjusted EBITDA (2010: 100%).

§ Adjusted basic EPS** of 46.2 EUR cents per share (2010: 38.5 EUR cents per share)

 

 

 

The group is tax registered, managed and controlled from the Isle of Man where the corporate tax rate is set to zero. The objective of financial risk management is to contain, where appropriate, exposures in these financial risks to limit any negative impact on the Group’s financial performance and position. Annual growth rate of 50% for 2012-2013, 63% for 2014, 10% for 2015, 13% for 2016 and 2% for the following years, based on the average forecast GDP growth rate for the UK.

 

 

 

 

Adjusted Net Profit and Adjusted Earnings per Share

31 December,

2011

2010

EUR000

EUR000

Payroll and related expenses

10,262

5,999

Accrued expenses

5,112

1,218

Related parties (note 27)

599

-

Other payables

935

37

16,908

7,254

 

 

 


 

On 24 November 2011 the Group acquired 85% of the shares of S-Tech Limited (hereinafter “S-Tech”), a live games provider in Asia. The acquisition comprised an initial consideration of £15.5 million and a deferred contingent consideration of up to £7.5 million.

 

§ The royalty rate was based on a third party market participant assumption for use of the IP Technology, considering market competition, quality, absolute and relative profitability.

 

 

The fair value of the intangible assets acquired is based on the discounted cash flows expected to be derived from the use of the asset. Distribution costs

 For the year ended

 For the year ended

 31 December 2011

EUR000

 31 December 2010

EUR000

Current income tax

Income tax on profits of subsidiary operations

1,866

1,685

Previous year taxes

(571)

939

Deferred tax (note 23)

(338)

(281)

Total tax charge

957

2,343

 

Fair value adjustments on acquisition relate solely to the customer list, which is being amortised at a rate of 12.5% per annum.

 

The fair value of the options granted under the ESOP is estimated as at the date of grant using the Black-Scholes model. The amount included above represents the fair value of contingent consideration as at the acquisition date.

Property, plant and equipment comprise computers, leasehold improvements, office furniture and equipment, and motor vehicles and are stated at cost less accumulated depreciation. A number of operators state that as much as 30% of new customers play via mobile, in part linked to the growth of in-play betting. The directors believe that the adjusted profit represents more closely the underlying trading performance of the business.

 

 For the year ended

 For the year ended

 

Note

 31 December 2011

EUR’000

 31 December 2010

EUR’000

Revenues

4

207,485

142,294

Distribution costs

(129,140)

(72,867)

Administrative expenses

(26,191)

(24,118)

Total operating costs

(155,331)

(96,985)

Operating profit before the following items:

82,644

68,863

Professional expenses on acquisitions

(1,488)

(1,802)

Employee stock option expenses

9

(4,678)

(5,855)

Amortisation of intangible assets

11

(23,773)

(13,674)

Decline in fair value of available for sale investments

14

(551)

(2,223)

Total

(30,490)

(23,554)

Operating profit

5

52,154

45,309

Total financing income

6a

3,972

1,690

Financing cost – movement in deferred and contingent consideration

25

(6,075)

(736)

Financing cost – other

(1,186)

(424)

Exchange rate differences – on deferred consideration

12a

-

(1,200)

Total financing cost

6b

(7,261)

(2,360)

Income from associate

12a

36,073

30,792

Amortisation of intangibles in associate

12a

(5,729)

(8,266)

Share of profit of associate

30,344

22,526

Share of net loss in joint ventures

(546)

(152)

Profit before taxation

78,663

67,013

Tax expense

7

(957)

(2,343)

Profit for the year

77,706

64,670

Other comprehensive income for the year:

Transfer to profit and loss on sale

-

(1,025)

Adjustments for change in fair value of available for sale equity instruments

14

1,995

-

Total comprehensive income for the year

79,701

63,645

Profit for the year attributable to:

Owners of the parent

77,696

64,670

Non-controlling interest

10

-

77,706

64,670

Total comprehensive income attributable to:

Owners of the parent

79,691

63,645

Non-controlling interest

10

-

79,701

63,645

 Earnings per share for profit attributable to the owners of the parent during the year:

Basic (cents)

8

31.8

26.7

Diluted (cents)

8

31.4

25.7

 

 

 

 

 

NOTE 15 – OTHER NON-CURRENT ASSETS

 

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. The Company and its advisers have undertaken a significant amount of work to prepare for a Main Market admission and expect to make the move as soon as possible.

 

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The experience gained through the project has given Videobet substantial expertise of migration and technology deployment in a broad range of operating environments. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. Non-monetary items are converted at the rate of exchange used to convert the related balance sheet items i.e. The consideration was structured to enable payment out of existing resources and future cash flows and incorporates a performance related element dependent on PTTS and its subsidiaries (the PTTS Group) meeting certain targets.

As part of the partnership between Videobet and Scientific Games, the Group formed an additional Joint Venture called International Terminal Leasing (“ITL”) in March, for the purpose of supplying gaming terminals to Global Draw, mainly dedicated to Ladbrokes. Group holds approximately 14% of its funds (2010- 26%) in financial institutions below A- rate.

 

The areas requiring the use of estimates and critical judgments that may potentially have a significant impact on the Group’s earnings and financial position are impairment of goodwill, the recognition and amortisation of development costs and the useful life of property, plant and equipment, the fair value of available for sale investments, share based payments, legal proceedings and contingent liabilities, determination of fair values of intangible assets acquired in business combinations, income tax, and determination of fair value of contingent consideration.

NOTE 18 – CASH AND CASH EQUIVALENTS

 

Finally, the acquisition of leading casino content developer, Ash Gaming was completed in December. At the same time the Company has sought to put in place the financial and operational capacity necessary to manage future growth.

 

As Playtech continues to expand its sources of revenues it has increased its diversification.

K. Excluding the French market, network liquidity grew over 20% on a like-for-like basis in the year, reflecting the success of its licensees in attracting players who were keen to migrate to high quality operators in the aftermath of the DoJ’s actions. During the year Mobenga launched with Betchoice in Australia in advance of the important final days of the Melbourne Spring Carnival. – they are out of the money) and therefore it would not be advantageous for the holders to exercise those options. Carrying amounts are reviewed on each balance sheet date for impairment. In addition, further consideration may be payable to the extent that the adjusted EBITDA of the PTTS Group for 2014 exceeds certain targets. More details are included in note 31.

 

 

 

 

 

2011

2010

EUR000

EUR000

Operating expenses

155,331

96,985

Amortisation and depreciation

29,137

17,090

Decline in fair value of available for sale investments

551

2,223

One-off legal costs relating to the litigation with William Hill

1,389

-

Professional costs on acquisitions

1,488

1,802

Employee stock option expenses

4,678

5,855

Adjusted Operating Expenses

118,086

70,015

 

For the Mobenga CGU with carrying value of EUR20.1 million (2010: EURnil): Discount rate of 15.5% which is based on the Group’s WACC to reflect management’s assessment of specific risks related to the goodwill. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. Consequently the financial profile of the consolidated business has changed. The risks arising from the Group’s financial instruments are credit risks and market price risks, which include interest rate risk, currency risk and equity price risk. Where intangible assets are acquired as part of a business combination they are recorded initially at their fair value. In accordance with IAS36, the Group will regularly monitor the carrying value of its interest in the PTTS business.

31 

December

31 

December

2011

2010

EUR000

EUR000

Deferred revenues – non-current:

Foundation Group Limited

8,264

10,207

AsianLogic

-

1,262

Other

655

-

8,919

11,469

 

Bingo has made great progress this year, with strong growth from its existing licensee base, together with a number of new licensees coming on stream. An estimate for doubtful debts is made when there is objective evidence that the Group will not be able to collect amounts due according to the original terms of receivables. Share capital

Update on move to Premium Listing

C.

 

The ageing of trade receivables that are past due but not impaired can be analyzed as follows:

 

IFRS 7 requires certain disclosure which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement (see note 29). More details including carrying values are included in notes 10 and 11.

 

The poker product has performed well in what have been unstable market conditions.

 

V. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Mobenga is therefore a significant addition in the mobile environment and it positions Playtech ahead of the curve – and the competition – in a key emerging segment. Amortisation of development cost and other intangible assets and the useful life of property, plant and equipment

 

In my first full-year report as Chief Financial Officer, I am very pleased to be able to report that Playtech has again delivered a robust financial performance, with Gross income for the year rising by 41% to EUR243.6 million (2010: EUR173.1 million) and total revenues for the year increasing 46% to EUR207.5 million. Investment in International Terminal Leasing

6,047

-

162,997

162,583

 

We start 2012 in a very strong position and have a good pipeline of new licensees and product opportunities, together with a significantly enhanced balance sheet. The following table gives the assumptions made during the years ended 31 December 2010 and 2011:

 

Annual growth rate of 226% for 2012, 34% for 2013, 43% for 2014, 20% for 2015-2016 and 2% for the following years, based on the average forecast GDP growth rate for the UK.

2011

2010

EUR000

EUR000

At the beginning of the year

1,950

2,231

Arising on the acquisitions during the year (note 25)

3,675

-

Reversal of temporary differences, recognised in the consolidated statement of comprehensive income

( 338)

( 281)

5,287

1,950

 

 

31 

December

31 

December

2011

2010

EUR000

EUR000

Available for sale investments comprise:

A. In the prior year, management identified Tribeca as a CGU. Intangible assets

 

Since the acquisition date, PTTS has contributed EUR41.2 million to group revenues, EUR2.1 million to group profits, EUR11.0 million to Group adjusted EBITDA and EUR9.8 million to Group adjusted net profit respectively. On completion, 1 July 2011, PTTS, a newly incorporated holding company established in connection with the acquisition, owned a group of new companies (together the PTTS Group) which owned the assets carrying out a range of complementary B2B online gaming service operations that provide support to the Group’s licensees.

Dividend

 As of

 As of

 31 December 2011

EUR000

 31 December 2010

EUR000

British Virgin Islands

439,033

220,399

Isle of Man

75,802

58,313

Sweden

19,167

-

Cyprus

14,418

7,438

Estonia

7,020

4,222

UK

5,698

378

Rest of World

3,804

2,095

564,942

292,845

 

31 December

31 December

2011

2010

EUR000

EUR000

Prepaid expenses

4.871

2,584

VAT and other taxes

3,643

1,197

Short term deposits

2,106

47

Advances to suppliers

152

17

Related parties (note 27)

2,871

2,459

Loan to customer

530

1,116

Loan to affiliate

4,700

1,013

Other receivables

1,355

931

20,228

9,364

 

 

WOE is related to Playtech by virtue of a significant common shareholder.

 

 

 

The following new standards, interpretations and amendments, which have not been applied to these financial information, will or may have an effect on the Group’s future financial information:

 

Management regularly monitors the key risks affecting the Group, including the regulatory environment in which the Group operates. However following an increase in the market value during the second half of 2011, an amount of EUR2.0 million (2010 – EURnil) has been recognised directly in equity, within the available for sale reserve.

 

For business combinations completed on or after 1 January 2011, cost comprises the fair value of assets given and liabilities assumed, plus the amount of any non-controlling interests in the acquire. The COPA agreement gives Playtech a leading position in the US’s largest poker-playing state and is significant since California will be an important liquidity pool for poker in the event that regulation is forthcoming.

The following are the contractual maturities (representing undiscounted contractual cash flows) of the Group’s financial liabilities:

At 31 December 2011, options under these schemes were outstanding over:

 

 

 

 For the year ended

 For the year ended

 31 December 2011

EUR cents

 31 December 2010

EUR cents

Basic

31.8

26.7

Diluted

31.4

25.7

EUR000

EUR000

Profit for the year attributable to owners of the parent

77,696

64,670

Number

Number

Denominator – basic

Weighted average number of equity shares

244,113,262

242,011,308

Denominator – Diluted

Weighted average number of equity shares

244,113,262

242,011,308

Weighted average number of option shares

  3,066,593

  9,173,326

Weighted average number of shares

247,179,855

 251,184,634

 

§ The growth rates and attrition rates were based on market analysis.

 

 

 

 

 

IFRS 11 Joint Arrangements;

There has also been substantial investment and work undertaken in advance of regulation being enacted in several other markets. AsianLogic

-

-

C. Share option exercised

Loans to customers are in respect of formal loan agreements entered into between the Group and its customer, which are carried at original advanced value less a provision for impairment.

December’s £100 million fundraising provided Playtech with significant firepower to make a number of accretive acquisitions and pursue its joint ventures strategy. Under the extended relationship, Playtech will provide a comprehensive games library comprising slots, table and card games, and a wide range of branded content in both download and web-based formats. The balances held at the year-end are set out below and the liability is included in trade payables:

Adjusted EBITDA grew 22% demonstrating an excellent performance. Software LTD

Israel

100%

Develops online software

Technology Trading IOM Limited

Isle of Man

 

100%

Owns the intellectual property rights of the GTS, VF and Ash Gaming businesses

Gaming Technology Solutions Limited

UK

100%

Holding company of VS Gaming and VS Technology

VS Gaming Limited

UK

100%

Develops soft and casino games

VS Technology Limited

UK

100%

Develops EdGE platform

Bandwick Investments Ltd       

Cyprus

100%

Holding company of Bandwich Investments OU

Bandwick Investments OU

Estonia

100%

Owns a building

Virtue Fusion (Alderney) Limited

Alderney

100%

Online bingo and casino software provider

VF Interactive Gaming Limited

Malta

100%

Dormant

Virtue Fusion CM Limited

UK

100%

Chat moderation services provider to end users of VF licensees

Playtech Services Romania S.R.L

Romania

100%

Providing customer support

VB CMS OU

Estonia

100%

Develops software for fixed odds betting terminals and casino machines

Playtech Software (Alderney) Ltd

Alderney

100%

To hold the company’s Alderney Gaming license

Playtech Gaming SAS

France

100%

Dormant

Intelligent Gaming Systems Limited

UK

100%

Casino management systems to land based businesses

VF 2011 Limited

Alderney

100%

Holds license in Alderney for online gaming

PT Turnkey Services Limited

British Virgin Islands

100%

Holding company of the Turnkey Services group

PT Turnkey EU Services Limited

Cyprus

100%

Turnkey services for EU online gaming operators

PT Entretenimiento Online EAD

Bulgaria

100%

Poker Bingo network for Spain

PT Marketing Services Limited

British Virgin Islands

100%

Marketing services to online gaming operators

PT Domains Limited

British Virgin Islands

100%

Domains hosting services to online gaming operators

Fullaccess Trading Limited

Cyprus

100%

Domains hosting services for EU

Ciera Trading Limited

Cyprus

100%

Marketing services to parent company

KarminaTrading Limited

British Virgin Islands

100%

Marketing services to parent company

PT Operational Services Limited

British Virgin Islands

100%

Operational hosting services to online gaming operators

Tech Hosting Limited

Alderney

100%

Alderney Hosting services

PT Antigua Limited

PT Entertainment services

Antigua

Antigua

100%

100%

Operational services

Holder of Antiguan license for Poker Network Online Gaming Operator

Paragon International Customer Care Limited

British Virgin Island branch office in the Philippines

100%

English Customer support, chat, fraud, finance, dedicated employees services to parent company

Starting Point Consultants Limited

Cyprus

100%

Operational administration services to parent company

CSMS Limited

Bulgaria

100%

Consulting and online technical support, data mining processing and advertising services to parent company

 

TCSP Limited

Serbia

100%

Operational services for Serbia

Xwise marketing (Israel) Limited

 

Israel

 

100%

 

Marketing services to parent company

Xwise Research Development (Israel) Limited

 

Israel

 

100%

Maintenance to affiliate program of parent company

S-Tech Limited

British Virgin Islands branch office in the Philippines

85%

Live games services to Asia

PT Advisory Services Limited

British Virgin Islands

100%

Holds PT processing Advisory Ltd

PT Processing Advisory Limited

British Virgin Islands

100%

Advisory services for processing cashier to online gaming operators

PT Processing EU Advisory Limited

Cyprus

100%

Advisory services for processing cashier for EU online gaming operators

PT Network Management Limited

British Virgin Islands

100%

Manages the ipoker network

Gamepark Investments Limited

British Virgin Islands

100%

Subsidiary of PT Network Management

Playtech Mobile (Cyprus) Limited

Cyprus

100%

Holds the IP of Mobenga AB

Playtech Holding Sweden AB

Sweden

100%

Holding company of Mobenga AB

Mobenga AB

Sweden

100%

Mobile sportsbook betting platform developer

Ash Gaming Limited

UK

100%

Develops interactive gambling and betting games

 

The preparation of financial information in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial information and the reported amounts of revenues and expenses during the reporting period. The directors considered that the fair value of the consideration received by way of discount to the market value represented deferred income of the software license agreement. Accordingly, the board has determined to pay a dividend in May 2012 for the 2011 financial year of 16.5 EUR cents per share. Finance income

Interest received

475

492

Dividend received from available for sale investments

3,075

1,074

Exchange differences

422

124

3,972

1,690

B. Share based payments

31 December

31 December

2011

2010

EUR000

EUR000

Customers

16,599

10,974

Related parties (note 27)

4,408

2,411

21,007

13,385

 

 

For the current year, management has separately disclosed revenue information for the Videobet product. The majority of the trade receivables balance of EUR21.0 million as at 31 December 2011 (2010: EUR13.4 million) was due to amounts payable by licensees for the month of December, as these are principally paid one month in arrears.

 

 

 

§ Net cash balances*** at year end of EUR137.3 million (2010: EUR68.5 million) following a £100 million fundraising in December, providing new capital to support joint ventures in newly regulated markets, and funding of targeted acquisitions

 

§ The income approach, in particular, the relief of royalty approach was applied for the valuation, considering projected revenues derived from the business.

“These are really exciting times for Playtech which has once again delivered an excellent set of financial results, and has consolidated its position as the clear market leader in the provision of software and services to the online gaming industry. In accordance with IAS36, the Group will regularly monitor the carrying value of its interest in the Mobenga business.

Playtech remains highly cash generative, with very high cash conversion from adjusted EBITDA and net cash balances (defined as cash and cash equivalents less bank borrowings) of EUR137.3 million (2010: EUR68.5 million) at the end of the year which includes the proceeds received from the December shares placing of EUR117.5 million, less EUR97.2 million of acquisition payments during the year.

 

 

 

EUR000

Cash consideration

45,000

Non-current deferred consideration

35,195

Current deferred consideration

45,000

Maximum contingent consideration

140,000

Total maximum cash consideration

265,195

Finance cost arising on discounting of deferred and contingent consideration

(51,958)

Fair value of consideration

213,237

Cash purchased

(687)

Net cash payable (of which EUR45.0m was paid in the year)

212,550

 

The Group’s cash usage in investing activity was EUR100.0 million (2010: EUR21.7 million), principally due to the considerations paid for acquisitions of EUR97.2 million, EUR81.7 million paid for new acquisitions in 2011 and EUR15.5 million paid as final payments due to VF and GTS acquisitions (2010: EUR26.1 million) These amounts were partially offset by the EUR35.1 million dividend received from the investment in WH Online (2010: EUR32.3 million). Annual growth rate of 22% for 2012, 62% for 2013, 4% for 2014, 5% for 2015, 2% for 2016 and 2% for the following years, based on the average forecast GDP growth rate for the UK.

 

 

 

 

 

Loans and receivables

 

 

The main factors leading to the recognition of goodwill are the synergistic growth and revenues expected to be created by the combined highly complementary business activities and the strengthening of the Group’s position in comparison to its competitors in the market. In response to this market shift Playtech acquired the mobile sportsbook enabler, Mobenga, in August for an initial EUR8.0 million with a further earnout consideration payable of up to EUR15.8 million. Impairment of goodwill

Playtech Limited

Adjustments to fair value include the following:

Providing licensees with a range of outsourced services, as well as a comprehensive technology solution, has further expanded the market opportunity. Preparation work for the launch of a mobile bingo offering was also undertaken, with an expected go-live date set for the first half of 2012. Interim dividends are recognised when paid.

 

Key assumptions are as follows:

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated balance sheet differs from its tax base, except for differences arising on:

 

Amount

Amortisation

EUR000

%

IP Technology

90

12.5

Total intangible assets

883

12.5

973

 

 

 

The Group held cash balances which include monies held on behalf of operators in respect of operators’ jackpot games and poker operation. In 2010 the Group sold all of its shares in Foundation Group Limited. Adjusted Earnings per share (‘Adjusted EPS’) for the year rose 20% to 46.2 EUR cents (2010: 38.5 EUR cents). The computed fair value at acquisition is presented in the table above, and the undiscounted range of possible payments is between EURnil and EUR15.8 million. Income taxes and deferred taxation

 

 For the year ended

 For the year ended

 31 December 2011

EUR000

 31 December 2010

EUR000

Casino

114,385

96,710

Poker

21,793

27,406

Bingo

15,064

10,853

Videobet

7,769

2,026

Services

43,012

1,079

Other

5,462

4,220

Total revenues

207,485

142,294

 

31 

December

31 

December

2011

2010

EUR000

EUR000

Loan to customer

221

2,679

Loan to affiliate

1,845

157

Advance for partnership (note 12C)

-

2,430

Rent and car lease deposits

743

793

Other

11

11

2,820

6,070

 

GTS is becoming the games engine for a variety of Playtech products and a broader range of Playtech casino content will shortly be available across the bingo platform. Legal proceedings and contingent liabilities

 

Given the repayment of the loan in the beginning of 2012 and the Group’s significant retained earnings, capital risk is not considered significant. The weighted average number of equity shares in issue and the earnings, being profit after tax is as follows:

 

 

NOTE 9- EMPLOYEE BENEFITS

 

 


NOTE 29 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

 

IAS 28 Investments in Associates and Joint Ventures;

Elsewhere the Company launched its Live Dealer casino product for Betfair which is fully integrated into its broader casino offering with a unified player management and bonus system. The Group’s subsidiaries are located in different jurisdictions. The financial information does not constitute the Group’s financial information for the year ended 31 December 2011 or 31 December 2010, but is derived from those financial information.

 

Services

Details of the provisional fair value of identifiable assets and liabilities acquired from subsidiaries, purchase consideration and goodwill are as follows:

 

 

Total staff costs comprise the following:

 NOTE 12- INVESTMENTS IN EQUITY ACCOUNTED ASSOCIATES JOINT VENTURES

 

The Group is exposed to a variety of financial risks, which result from its financing, operating and investing activities.

 

Management review the performance of the Group by reference to group-wide profit measures and the revenues derived from 6 (2010 – 4) main product groupings:

 For the year ended

 For the year ended

 31 December 2011

EUR000

 31 December 2010

EUR000

Salaries and employee related costs

65,630

47,732

Employee stock option costs

4,678

5,855

70,308

53,587

Average number of employees

1,627

1,041

Distribution

110

81

General and administration

1,737

1,122

 

The contingent consideration for the acquisition of the Purchased Assets was payable in GBP. Contingent consideration of EUR111.9m is measured at fair value using level 2 in accordance with IAS 39. It clearly demonstrates to potential licensees the value such premium content can offer in player acquisition and retention.

For options granted on 11 March 2011, 26 August 2011and 16 December 2011

Dividend yield (%)

2.76%-2.81%

Expected volatility (%)

49.8%-50.5%

Risk free interest rate (%)

2.15% to 3.78%

Weighted average exercise price

£3.44

 

 

The Group’s receivables comprise trade and other receivables, cash and cash equivalents, and loans to customers in the balance sheet

§ Services

The following new standards, interpretations and amendments, which have not yet been endorsed by the EU, are effective for annual periods beginning on or after 1 January 2013:

§ Poker

 

2011

2010

EUR000

EUR000

Total assets

167,337

116,584

Total liabilities

113,388

84,740

Revenues

369,945

295,200

Profit

122,970

105,519

 

On 31 August 2011 (hereinafter “Completion”) the Group acquired 100% of the shares of Mobenga AB (hereinafter “Mobenga”), the leading mobile sportsbook betting platform provider.

The Group’s policy is not to enter into any currency hedging transactions.

None of the other new standards, interpretations and amendments effective for the first time from 1 January 2011, have had a material effect on the financial information.

On 8 March 2011, the Group entered into an agreement with Scientific Games to form a partnership called International Terminal Leasing (hereinafter “ITL”) which relates to the strategic partnership with Scientific Games Corporation.

 

 

 

The tax credit in the current year of EUR0.6m relates to the creation of deferred tax asset in one of the group’s subsidiaries. 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. It is increasingly attracting players on to platforms in its own right – particularly through sports betting. Immediately prior to Completion, the Group acquired the Intellectual property and Technology (hereinafter “IP Technology”) of Mobenga AB for cash consideration of EUR1 million.

The key assumptions used by management to determine the value in use of the IP Technology, brand and customer relationships within Ash Gaming business are as follows:

At a product level, Casino revenues increased 18% to EUR114.4 million (2010: EUR96.7 million), helped by strong growth in the branded games portfolio.

 

 

“The Board was delighted to appoint David Mathewson as Playtech’s Chief Financial Officer in May 2011. Royalty and other income receivable under fixed-term arrangements are recognised over the term of the agreement on a straight line basis.

 

Except as described below, the full year results are prepared on the basis of the accounting policies stated in the Group’s Annual Report 2010.

Adjusted EBITDA is calculated after including the income from Playtech’s associate, WH Online, together with adding back expenses related to professional costs on acquisitions, one-off legal costs related to the litigation with William Hill, and excluding various non-cash charges.

W. In that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.

Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the balance sheet date.

The group-wide profit measures are adjusted net profit (see note 8) and adjusted EBITDA. Set out below is a table reconciling the reported operating expenses to the adjusted operating expenses. They arise principally through the provision of services to customers (e.g.

 

The main factors leading to the recognition of goodwill are the synergistic growth and revenues expected to be created by the combined highly complementary business activities and the strengthening of the Group’s position in comparison to its competitors in the market. The Directors do not consider there to have been any further impairment in the investment since 3 July 2009. The decrease in WH Online amortisation is due to the affiliates contracts and customer relationship assets, identified under the investment in WH Online joint venture, being fully amortised during the prior year.

 

 

 

 

 

On 15 December 2011 the Group acquired 100% of the issued share capital of Ash Gaming Limited (‘Ash Gaming’), which delivers sophisticated slot machines, fixed odds games and content in the area of virtual races. Management has also reviewed the key assumptions and forecasts for the customer lists and affiliates, applying the above same key assumptions. The total number of options in issue is disclosed in note 9. Such estimates are based on management’s experience of the business, but actual outcomes may vary. Those techniques are significantly affected by the assumptions used, including discount rates and estimates for future cash flows. Acquisition of Ash Gaming Limited

25d

27,027

-

E. Determination of the fair value of contingent consideration

 NOTE 16 – TRADE RECEIVABLES

 

 

 

 

R.

Financial liabilities

Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

 

 

There is no allocation of operating expenses, profit measures, assets and liabilities to individual product groupings. Investment in William Hill Online

 

Geographical analysis of revenues by jurisdiction of gaming license

Playtech’s strategy, supported by its strong balance sheet, now centres on developing its three highly complementary business channels: products and services; turnkey solutions; and joint ventures. Acquisition of Intelligent Gaming Systems Limited

 

 

The Group closely monitors the activities of its counterparties and controls the access to its intellectual property which enables it to ensure the prompt collection of customers’ balances.

 

 

NOTE 28 – SUBSIDIARIES

 

Details of the Group’s subsidiaries as at the end of the year are set out below:

 

Revenue-driven costs comprise mainly fees paid to sales agents and license fees paid to third parties for branded content or games developers, which are typically calculated as a share of the revenues generated from a particular game. Domain names are reviewed for impairment annually.

 

 

 

 

 

 

Beyond the strategic benefits brought to Playtech by PTTS, its operational performance in the six months following completion of the acquisition has been encouraging, with revenues and profit performance ahead of expectations.

- Ends -

Management has determined the fair value of contingent consideration using valuation techniques taking into account the probability of expected outcomes and appropriate discount rates. The management monitors interest rate fluctuations on a continuous basis and acts accordingly. No tax is assessed in the British Virgin Islands, the Company’s country of incorporation. On disposal of the shares, the available for sale reserve at 31 December 2009 of EUR1,025k was reclassified to profit and loss, resulting in a net credit of EUR0.2 million in the consolidated statement of comprehensive income for the prior year.

Revenue by product

Playtech (AIM: PTEC), the international designer, developer and licensor of software for the online, mobile and land-based gaming industry, announces its audited full year results for the year ended 31 December 2011.

Annual growth rate of 1% for 2012, 10% for 2013-2015 and 2% for the following years, based on the average forecast GDP growth rate for the UK.

On 26 January 2011, the Group acquired 100% of the shares of Intelligent Gaming Systems Limited (‘Intelligent Gaming’ or ‘IGS’), a provider of software-based casino management systems to land-based casinos. Playtech’s gaming applications – online casino, poker and other P2P games, bingo, mobile, live gaming, land-based kiosk networks, land based terminal and fixed-odds games – are fully inter-compatible and can be freely incorporated as stand-alone applications, accessed and funded by the operators’ players through the same user account and managed by the operator by means of a single powerful management interface.

 

In January 2012, the Group entered into an agreement with Merkur Interactive GmbH, the online division of the Gauselmann Group.

 

 

 

 

§ The growth rates and attrition rates were based on market analysis.

%

Computers and gaming machines

33.33

Office furniture and equipment

7.00-20.00

Building and Leasehold improvements

10.00-20.00, or over the length of the lease

Motor vehicles

15

 

 

 

 

A. Established in 2000, Ash is one of the leading suppliers entirely dedicated to producing interactive gambling and betting games. The business has also enhanced its capabilities for hosting third party games content, which will deliver considerable benefits in workload and time-to-deployment for an increasing range of new content.

The following table illustrates the number and weighted average exercise prices of shares options for the ESOP.

Where the Group has generated a significant amount of cash, it will invest in higher earning interest deposit accounts. We have positioned ourselves to take advantage of the opportunities that these changes present.

A copy of the results presentation will be published on the Company’s website. This agreement reflects Playtech’s success of deepening its relationships with existing licensees who can see the benefits of a seamless and integrated solution which delivers the best opportunities for maximising player yields.

The loans are repayable in monthly installments.

 

31 

December

31 

December

Note

2011

2010

EUR000

EUR000

Non-current contingent consideration consists:

Acquisition of GTS Limited

-

5,474

Acquisition of Intelligent Gaming Systems Limited

25a

709

-

Acquisition of PT Turnkey Services Limited

25b

98,643

-

Acquisition of Mobenga AB Limited

25c

11,633

-

110,985

5,474

Current contingent consideration consists:

Acquisition of Intelligent Gaming Systems Limited

25a

929

-

Acquisition of GTS Limited

-

2,937

Acquisition of Virtue Fusion

26

-

8,122

929

11,059

NOTE 14 – AVAILABLE FOR SALE INVESTMENTS

 

 

Patents Domain names

Technology IP

Development costs

Customer

List Affiliates

Goodwill

Total

EUR000

EUR000

EUR000

EUR000

EUR000

EUR000

Cost -

As of 1 January, 2010

3,896

4,657

16,293

33,586

21,703

80,135

Additions

101

10

7,793

-

-

7,904

Assets acquired on previous year business combinations

-

-

-

-

1,182

1,182

Assets acquired on business combinations

3,900

3,035

-

18,828

13,750

39,513

As of 31 December, 2010

7,897

7,702

24,086

52,414

36,635

128,734

Accumulated amortisation -

As of 1 January, 2010

1,012

156

4,393

9,115

-

14,676

Provision

845

1,830

4,720

6,279

-

13,674

As of 31 December, 2010

1,857

1,986

9,113

15,394

-

28,350

Net Book Value –

As of 31 December, 2010

6,040

5,716

14,973

37,020

36,635

100,384

 

 

 

The maximum exposure to credit risk at the reporting date is the carrying value of the financial assets classified as available-for-sale.

 

Financial and Operational Review

The Group’s share in the Sciplay loss for the year was EUR0.6m (2010 – EUR0.4m) and has been recognised in the consolidated statement of comprehensive income.

 

 

The weighted average fair value of options granted during the year at the date of grant was £1.78 (2010 – £1.67)

Cash generated from financing activities was EUR122.0 million (2010: EUR39.5 million cash usage), being the net shares placing proceeds of EUR117.5 million, funds withdrawn from the credit facility of EUR27.5 million, netted off by payment of the final 2010 dividend of EUR23.4 million to shareholders.

 For the year ended

 For the year ended

 31 December 2011

 31 December 2010

 EUR000

 EUR000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit after tax

77,706

64,670

Adjustments to reconcile net income to net cash provided by operating activities (see below)

(1,525)

8,924

Income taxes paid

(1,821)

(2,591)

Net cash provided by operating activities

74,360

71,003

 CASH FLOWS FROM INVESTING ACTIVITIES

Long term deposits

33

(238)

Long term loan advances

2,560

(1,003)

Dividend received from equity-accounted associate

35,087

32,269

Acquisition of property, plant and equipment

(12,562)

(7,176)

Investment in available for sale investments (note 14)

-

(11,332)

Proceeds from sale of available for sale investments

-

2,665

Investment in joint ventures (note 12b c)

(4,445)

(2,920)

Acquisition of intangible assets

(79)

(111)

Acquisition of subsidiaries, net of cash acquired

(97,189)

(26,136)

Capitalised development costs

(9,542)

(7,793)

Investment in equity-accounted associates (note 12a)

(15,001)

-

Proceeds from sale of property, plant and equipment

1,138

57

Net cash used in investing activities

(100,000)

(21,718)

 CASH FLOWS FROM FINANCING ACTIVITIES

 Dividends paid to the holders of the parent

(23,377)

(45,593)

 Issue of share capital, net of issue costs

117,549

-

 Purchase of treasury shares

(366)

-

Proceeds from bank borrowings

27,533

-

 Exercise of options

614

6,127

 Net cash from/(used in) financing activities

121,953

(39,466)

INCREASE IN CASH AND CASH EQUIVALENTS

96,313

9,819

 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

68,519

58,700

 CASH AND CASH EQUIVALENTS AT END OF YEAR

164,832

68,519

 

This strategy is founded on maintaining a business with market-leading scale, a full product capability with the pre-eminent software platform and the most up-to-date, premier technology in the industry. The diluted adjusted EPS for the year was 45.7 EUR cents (2010: 37.1 EUR cents). In addition the Group received a return on initial investments of EUR1.7 million during the year.

 

The directors believe that the exposure to market price risk is acceptable in the Group’s circumstances.

Acquisition of Geneity Limited

Management has determined the fair value of contingent consideration using valuation techniques taking into account the probability of expected outcomes and appropriate discount rates. The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests.

 

 

 

 

Computers and gaming machines

Office

furniture and

equipment

 

Motor

vehicles

Building and Leasehold improvements

 

 

Total

EUR000

EUR000

EUR000

EUR000

EUR000

Cost -

As of 1 January, 2010

12,068

977

129

729

13,903

Additions

4,553

178

37

2,408

7,176

Acquired through business

combinations

 

847

 

39

 

-

 

-

 

886

Disposals

(412)

(63)

(12)

(97)

(584)

As of 31 December, 2010

17,056

1,131

154

3,040

21,381

Accumulated depreciation-

As of 1 January, 2010

4,982

343

42

141

5,508

Charge

3,045

176

30

165

3,416

Disposals

(289)

(24)

(9)

(97)

(419)

As of 31 December, 2010

7,738

495

63

209

8,505

Net Book Value –

As of 31 December, 2010

9,318

636

91

2,831

12,876

 

 

 

 

 

Computers and gaming machines

 

Office

furniture and

equipment

 

 

Motor

Vehicles

 

Building and Leasehold improvements

 

 

 

Total

 

EUR000

 

EUR000

 

EUR000

 

EUR000

 

EUR000

Cost -

As of 1 January, 2011

17,056

1,131

154

3,040

21,381

Additions

8,855

403

64

3,240

12,562

Acquired through business

combinations

 

2,066

 

219

 

110

 

322

 

2,717

Disposals

(1,410)

(165)

-

-

(1,575)

As of 31 December, 2011

26,567

1,588

328

6,602

35,085

Accumulated depreciation-

As of 1 January, 2011

7,738

495

63

209

8,505

Charge

4,457

176

56

675

5,364

Disposals

(262)

(70)

-

-

(332)

As of 31 December, 2011

11,933

601

119

884

13,537

Net Book Value –

As of 31 December, 2011

14,634

987

209

5,718

21,548

 

 

NOTE 10 -PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Outlook

Operationally the business made substantial progress on its existing projects during the year, notably the completion of a 20,750 machine roll-out for The Global Draw, demonstrating Playtech’s market-leading capabilities in what should become a significant future revenue stream. Determination of fair value of intangible assets acquired

Reported earnings per share (‘EPS’) for the year were 31.8 EUR cents based on the weighted average number of shares of 244.1 million (2010: 26.7 EUR cents, 242.0 million shares).

 

The Group is not a gaming operator and does not provide gaming services to players. Sportech PLC

1,444

(2,454)

1,444

(2,223)

 

H. The Company has focused on the pursuit of its regulated markets strategy and consolidating its position as the world’s leading supplier of software and services to the online gaming industry. The computed fair value at acquisition is presented in the table above, and the undiscounted range of possible payments is between EURnil and EUR3.5 million. This caused an exchange rate income in the amount of EUR26 thousands that was reflected in the consolidated statement of comprehensive income for 2011 (2010- expense of EUR1.2 million).

Liquidity risk arises from the Group’s management of working capital and the financial charges on its debt instruments. Joint Ventures

 

 

 

2011

2010

Number

Number

Shares vested on 30 November 2008 at an exercise price of $2.5 per share

141,067

141,067

Shares vested on 30 November 2008 at an exercise price of £1.45 per share

410,250

489,979

Shares fully vested on 30 November 2008 at an exercise price of £2.32 per share

133,334

133,334

Shares vesting between 1 December 2006 and 6 February 2009 at an exercise price of $4.50 per share

282,046

325,046

Shares vesting between 1 December 2006 and 6 February 2009 at an exercise price of £2.55 per share

    610,000

    611,666

Shares vesting between 1 December 2006 and 1 December 2009 at an exercise price of £2.29 per share

200,000

  200,000

Shares vesting between 28 March 2007 and 28 March 2009 at an exercise price of £2.57 per share

    200,000

    200,000

Shares vesting between 21 June 2007 and 21 June 2009 at an exercise price of $5.75 per share

     11,000

     11,000

Shares vesting between 21 June 2007 and 21 June 2009 at an exercise price of £3.16 per share

     60,334

     60,334

Shares vesting between 11 October 2007 and 11 October 2009 at an exercise price of £1.72 per share

    208,334

    208,334

Shares vesting between 11 December 2007 and 11 December 2009 at an exercise price of $4.35 per share

     65,000

     65,000

Shares vesting between 11 December 2007 and 11 December 2009 at an exercise price of £2.21 per share

  254,669

  276,669

Shares vesting between 31 December 2007 and 31 October 2010 at an exercise price of £3.79 per share

-

250,000

Shares vesting between 31 December 2007 and 31 October 2010 at an exercise price of $7.48 per share

75,000

75,000

Shares vesting between 16 May 2008 and 16 May 2010 at an exercise price of $7.50 per share

     20,000

     20,000

Shares vesting between 16 May 2008 and 16 May 2010 at an exercise price of £3.79 per share

1,143,000

1,143,000

Shares vesting between 18 June 2008 and 18 June 2010 at an exercise price of $7.79 per share

9,468

9,468

Shares vesting between 18 June 2008 and 18 June 2010 at an exercise price of £3.96 per share

    110,252

    121,808

Shares vesting between 18 June 2008 and 18 June 2010 at an exercise price of £3.30 per share

     10,000

     10,000

Shares vesting between 10 October 2008 and 10 October 2011 at an exercise price of £3.51 per share

    112,500

    112,500

Shares vesting between 20 November 2008 and 20 November 2011 at an exercise price of $7.19 per share

     30,000

     30,000

Shares vesting between 20 November 2008 and 20 November 2011 at an exercise price of £3.51 per share

      55,500

      55,500

Shares vesting between 31 December 2008 and 31 December 2010 at an exercise price of $7.68 per share

      18,000

      18,000

Shares vesting between 31 December 2008 and 31 December 2010 at an exercise price of £3.86 per share

      41,000

      49,500

Shares vesting between 25 April 2009 and 25 April 2012 at an exercise price of £4.35 per share

    522,167

    569,667

Shares vesting between 21 May 2009 and 21 May 2012 at an exercise price of £5.31 per share

    500,000

    500,000

Shares vesting between 28 November 2009 and 28 November 2012 at an exercise price of £3.20 per share

   1,502,725

   1,674,210

Shares vesting between 31 December 2008 and 31 December 2011 at an exercise price of £3.1725 per share

    200,000

    200,000

Shares fully vesting on 22 May 2012 at an exercise price of £4.155 per share

   765,000

   765,000

Shares fully vesting on 22 May 2012 at an exercise price of £4.05 per share

    75,000

    75,000

Shares fully vesting on 6 November 2012 at an exercise price of £3.7 per share

  1,130,000

  1,260,000

Shares vesting between 18 April 2012 and 18 April 2013 at an exercise price of £5.12 per share

1,063,000

1,098,000

Shares vesting between 3 June 2012 and 3 June 2013 at an exercise price of £4.84 per share

220,000

328,000

Shares vesting between 26 August 2012 and 26 August 2013 at an exercise price of £4.16 per share

264,725

288,670

Shares fully vesting on 26 August 2013 at an exercise price of £4.16 per share

180,275

    216,330

Shares fully vesting on 10 March 2014 at an exercise price of £3.5225 per share

1,999,950

-

Shares fully vesting on 25 August 2014 at an exercise price of £3.0325 per share

100,000

-

Shares fully vesting on 16 December 2014 at an exercise price of £2.3 per share

120,000

-

12,843,596

11,592,082

 

 

Year ended 31 December, 2011

In thousands of Euro

Total

Within 1 year

1-2 years

2 – 5 years

Trade payables

17,678

17,678

-

-

Loans and borrowings

27,533

13,787

13,746

-

Other accounts payable

16,908

16,908

-

-

Progressive and other operators’ jackpots

 

20,491

 

20,491

 

-

 

-

Deferred consideration

80,194

35,195

45,000

-

Contingent consideration

131,331

929

768

129,634

Other non-current liabilities

1,423

-

756

667

Year ended 31 December, 2010

In thousands of Euro

Total

Within 1 year

1-2 years

2 – 5 years

Trade payables

13,013

13,013

-

-

Loans and borrowings

-

-

-

-

Other accounts payable

7,254

7,254

-

-

Progressive and other operators’ jackpots

 

12,847

 

12,847

 

-

 

-

Deferred consideration

15,001

15,001

-

Contingent consideration

16,795

11,059

5,736

-

Other non-current liabilities

953

-

767

186

 

There will be significant opportunities for the two companies to work together across the platform’s online, remote and land-based channels. Accounting principles

 NOTE 8 – EARNINGS PER SHARE

Videobet

Analysis by geographical regions is made according to the jurisdiction of the gaming license of the licensee. Playtech’s financial strength makes it an attractive B2B partner for operators and has enabled it to be prominent in the industry’s continuing consolidation.

 

 

Management is not aware of any contingencies that may have a significant impact on the financial position of the Group.

 

 

Foreign exchange risk arises because the Group has operations located in various parts of the world. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

 

 

Investments in equity-accounted associates of EUR163.0 million (2010: EUR162.6 million) relates mainly to the investment in WH Online of EUR156.6 million (2010: EUR162.6 million).

 

 

 

The methods and assumptions applied, and the valuation techniques used, are disclosed in note 29.

 

 

 

 

 

Playtech has made a strong start to 2012. Treasury shares

M. Paddy Power is Ireland’s largest bookmaker and is already a licensee of the Playtech poker and bingo products. In addition, new game features included the launch of the ‘Back bet’ side game, which allows active players at a card table to make a range of other bets, such as the outcome of cards to come or that will be dealt to them. Each time a progressive jackpot game is played, a preset amount is added to a cumulative jackpot for that specific game. The movement in contingent consideration since acquisition, which relates solely to the time value of money, is included in note 6 to the financial information.

 

 

 

For the PTTS CGU with carrying value of EUR218.4 million (2010: EURnil): Discount rate of 15.5% which is based on the Group’s WACC to reflect management’s assessment of specific risks related to the goodwill. Of this, the majority comprises assets acquired from PTTS (EUR218.4 million), together with assets acquired and related goodwill from the acquisitions of Tribeca, GTS, VF, Mobenga and Ash Gaming businesses; patent and intellectual property rights and development costs of new games and products. The Directors are especially encouraged by the performance of PTTS, where trading is significantly above management expectations.

Consideration paid/received for the purchase/sale of treasury shares is recognised directly in equity. The daily average revenues versus Q4 2011 on the same basis are over 3% ahead.

 

 

Analysis of Adjusted Operating Expenses

Cost of Operations

 

§ Adjusted net profit** increased by 21% to EUR112.8 million (2010: EUR93.2 million)

§ Establishment of new development capability in Kiev

 

 

The weighted average share price at the date of exercise of options was £3.47 (2010 -£5.08). Basis of consolidation

During the year, the Group issued 46,511,627 shares for a total consideration of EUR119.5 million. Intercompany transactions and balances between Group companies are therefore eliminated in full.

Adjusted Operating Expenses

Aggregated amounts relating to the ITL joint venture are as follows:

 

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

 

The contingent consideration is dependent on profits generated by the Mobenga business in 2013. Overall, in the second half of the year operating margins have improved, but the step change in the business profile will only really come with the opening of a material new market, or through Joint Venture opportunities.

The movement on the deferred tax liability is as shown below:

 

Ordinary shares are classified as equity and are stated at the proceeds received net of direct issue costs.

 

 

The Group is currently assessing the impact, if any, that these standards will have on the presentation of its consolidated results.

 

 

 

 


NOTE 13 – Deferred and contingent consideration

§ Bingo

D. As of the purchase date S-Tech had net liabilities and therefore the consideration paid was the $1 par value of 85 shares.

F. As at 31 December 2011 the market value of this investment was EUR10.3 million (2010 – EUR8.9 million). This was reported as being the UK’s biggest ever jackpot win and the third highest ever worldwide. Accordingly the disclosures below are provided on an entity-wide basis

Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:

B. This increased engagement maximises player value by providing a revenue-generating distraction during game downtime.

 NOTE 22 – TRADE PAYABLES

D. This has led to an upgrade of the international business to the same technology as used in the UK, enabling a single platform solution across all markets.

Playtech’s people are at the heart of its efforts to maintain a leading position in technological innovation, the provision of a premium client service, and delivering the economies of scale that we have enjoyed and will flow from the successful negotiation of changing markets. The Company has retained a cautious approach to the likely timeframe of a regulated US market, but is seeing a material increase in discussions and interest from a very broad range of potential licensees, as well as signing its first US licensee, COPA.

A.

The group paid an initial consideration of EUR2.9m (£2.5m) in cash and additional contingent consideration of up to EUR3.5m (£3.0m) is payable in respect of the adjusted PBT performance in 2011-2013 in the beginning of each following year.

Adjusted EBITDA

None of the other new standards, interpretations and amendments, which are effective for periods beginning after 1 January 2011 and which have not been adopted early, are expected to have a material effect on the Group’s future financial information.

Employee and outsourcing costs totalled EUR64.3 million (net of EUR7.8 million capitalised development costs), an increase from EUR39.6 million in the prior year and is mainly due to the acquisitions undertaken. Going forward, the acquisitions during the year will impact on these figures, and especially the inclusion of a full year of PTTS revenues.

EUR000

 

Reclassification of non-current asset as at 8 March 2011

2,430

Additional contributions payable

5,209

Share of profit in joint venture

71

Return of initial investment

(1,663)

Investment in joint venture at 31 December 2011

6,047

 

Distribution costs represent the direct costs of the function of providing services to customers, costs of the development function and advertising costs.          

C. When stripping out the impact of these acquisitions, Playtech achieved over 15% growth in Gross income, and over 21% after excluding the impact of the closure of the French market half way through 2010.

 

31 December

2011

2010

A.   Share Capital

Number of Shares

Share capital is comprised of no par value shares as follows:

Authorised

N/A(*)

N/A(*)

Issued and paid up

289,314,348

242,599,019

 

 

The main factors leading to the recognition of goodwill are the synergistic growth and revenues expected to be created by the combined highly complementary business activities and the strengthening of the Group’s position in comparison to its competitors in the market. This is where the convergence of operator activity and management of the player experience is shaping the industry’s future and is able to deliver both functionality and content across a wide range of distribution channels. Acquisition targets have typically been smaller companies or newer entrants who have recently developed proven complementary software and this combination of factors is most likely to deliver successful business integration into the overall Playtech offering.

It was these capabilities which enabled the Company to secure three significant licensee wins during 2011: the California Online Poker Association (COPA); Gala Coral; and Paddy Power, which moved its casino product to Playtech in October.

 

Licensees

 

 

 

 

%

Domain names

Nil

Internally generated capitalized development costs

33.33

Technology IP

20-33.33

Customer list

7-12.50

Affiliate contracts

5-12.50

Patents

Over the expected useful lives 10-33

 

The group’s future profit share from this joint venture varies depending on the commercial arrangements in which ITL and its partners enter into with third parties. The further consideration is capped at EUR140.0 million and will be paid in four broadly equal non-interest-bearing instalments over the 18 months following its determination in 2015.

 

 

Acquisition of Ash Gaming Limited

 

 

c)Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

NOTE 5 – OPERATING PROFIT

 

 

 

The Group has the following employee share option plans (“ESOP”) for the granting of non-transferable options to certain employees:

The last year has seen continual change, but limited certainty, in the European regulatory landscape, with developments in Italy, Spain, Denmark, Greece and Germany – all significant markets. The subsidiaries are taxed on their residual profit.

2011, the following amounts are included in deferred revenues:

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. Calculation of the fair value is based on a probability exercise of expected consideration payable. The effective rate, excluding these items, was 1.9% (2010: 2.1%). As a percentage of adjusted non-revenue related costs, employee costs have remained constant at just below 70% since the start of 2010, despite over a doubling of the Group’s headcount over the past two years. An initial consideration of EUR2.9 million (£2.5 million) was paid in cash and an additional consideration of up to EUR3.5 million (£3.0 million) is payable, dependent upon the adjusted PBT performance of IGS in 2011 to 2013, in the first half of each following financial year.

 

 

The acquisition will enable the wider distribution of Ash Gaming’s leading content both internationally and through a broader range of channels. Investment in AsianLogic

2,054

2,054

C. Those assumptions are described in note 9 and include, among others, the dividend growth rate, expected share price volatility, expected life of the options and number of options expected to vest. After excluding acquisitions in the year, adjusted operating expenses increased by 23%, mainly due to an increase in revenue driven costs and higher employee-related costs. Software license royalty fees charged to WH Online have been recognised as revenues in the Group accounts.

 

While there is so much going on at an operational level, the Company has not lost sight of its intention to seek a Premium Listing on the London Stock Exchange. Overall gross income increased 41% and total revenues rose 46% on the previous year. The placing was taken against the background of a number of significant opportunities across a broad range of markets. The Board believe this was a prudent course of action to take with the European financial markets under considerable strain in this period, making debt financing uncertain.  

B. amount subscribed for share capital in excess of nominal value)

Available for sale reserve

Changes in fair value of available for sale investments (note 14)

Retained earnings

Cumulative net gains and losses recognised in the consolidated statement of comprehensive income

 

 

 

 

§ The royalty rate was based on a third party market participant assumption for use of the IP Technology, considering market competition, quality, absolute and relative profitability.

 

 

 

*** Net cash balances defined as cash and cash equivalents less bank borrowings

For options modified as a result of the amendment to Plan on 1 July 2010

Dividend yield (%)

2.76%

Expected volatility (%)

52.9%

Risk free interest rate (%)

2.35%

Expected life of options to last exercise date (years)

5.42

Weighted average exercise price

£3.32

 

While this has the effect of increasing the payout to marginally above the 40% level on a basis of the current shares in issue, the Board believes this is appropriate and consistent with our indication that the interim dividend was merely deferred. Earnings per share have been calculated using the weighted average number of shares in issue during the relevant financial periods. The interest on the loans is 5%.

 

 

 

 

P.

Financial assets

On 30 April 2010 each of the parties purchased 50% of the share capital issued of Sciplay for a total consideration of EUR13,000. In particular, due to the size of the acquisition of PTTS which completed in July.

 

The fair value of the amendment to the Plan was estimated as at the date of grant using the Binomial model

Several of the Group’s licensees participate in progressive jackpot games. . Further information in relation to the determination of fair value of intangible assets acquired is given in note 25.

 

In thousands of Euro

Total

Financial institutes with A- and above rating

Financial institutes below A- rating

As at 31 December 2011

164,832

141,463

23,369

As at 31 December 2010

68,519

49,714

18,805

 

In Italy the Company successfully launched eight casino and cash poker licensees in July.

 

“Playtech has continued to focus on regulated markets with organic development and targeted acquisitions that will ensure it can take best advantage of the opportunities created by the structural changes underway across the worldwide gaming industry. Acquisition of Mobenga AB

25c

7,830

-

D. As land-based operators look to develop an online presence, the IGS casino management system provides a gateway to the integration of land-based and online formats in a seamless solution across all channels. Trade and other receivables are carried on the balance sheet net of bad debt provisions estimated by the Directors based on prior year experience and an evaluation of prevailing economic circumstances.

Share options outstanding at the end of the year have the following exercise prices:

 

Gross income rose 41% to EUR243.6 million (2010: EUR173.1 million) and comprises total revenues and Playtech’s share of profit from its associate income in William Hill Online (‘WH Online’). The movement in contingent consideration, which relates solely to the time value of money, since acquisition is included in note 6 to the financial information.

 

Non-controlling interest is recognised at the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. Bingo revenues increased 39% to EUR15.1 million (2010: EUR10.9 million) reflecting the ongoing strength of this increasingly important product. The game titles are distributed through platforms as well as direct to certain operators, principally under revenue share agreements.

 

 

NOTE 26 – ACQUISITIONS IN PRIOR YEAR

 

Monetary assets and liabilities – at the rate of exchange applicable at the balance sheet date; Income and expense items – at exchange rates applicable as of the date of recognition of those items.

 

 

 

 

§ The growth rates and attrition rates were based on market analysis.

 

The tax charge in 2011 of EUR0.9 million (2010: EUR2.3 million) is after a credit correction to previous years of EUR0.6 million (2010: prior year tax charge of EUR0.9 million). Fair value of available for sale investments

 

The bingo team have made good progress with the migration of Gala Bingo in itself a substantial project for the team, and completed a number of development projects for major existing licensees, which are due to launch over the coming year. Property, plant and equipment

The level in the fair value hierarchy within which the financial asset or financial liability is categorized in determined on the basis of the lowest level input that is significant to the fair value measurement. In addition, a significant element of the increase was due to the acquisition of PTTS on 1 July 2011.

Where it is not possible to establish the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash generating unit (i.e. Having been the first provider to pass cash table certification, Playtech secured its position as the top Italian regulated network, working with its licensees on projects such as the very successful cash table campaign ‘A million for all’.

 

 

§ Videobet

 

Annual growth rate of 9.6% for 2012, 4% for 2013, 3% for 2014, 2.5% for 2015 and 2% for the following years, based on the average forecast GDP growth rate for the UK.

 

 

 

The move to locally-regulated markets has also redefined the way in which operators and service providers address each market. as prices) or indirectly (i.e. Management believes the adjusted profit measures represent more closely the underlying trading performance of the business. The Group repaid the entire balance in February 2012.

 

Playtech has continued to secure new licensees, develop its product offering both organically and through acquisitions, and explore exciting new joint venture opportunities. In accordance with IAS 39, a significant or prolonged decline in the fair value of an available-for-sale financial asset is recognised in the consolidated statement of comprehensive income

Cash Flow

Sportech PLC is related by virtue of a common non-executive Director. The Group has not classified any of its financial assets as held to maturity. The Group actively measures, monitors and manages its financial risk exposures by various functions pursuant to the segregation of duties and principals. WH Online, Sciplay and International Terming Leasing (“ITL”) are associates of the Group. All other expenditure, including that incurred in order to maintain an intangible assets current level of performance, is expensed as incurred.

The Group has undrawn committed borrowing facilities available at 31 December 2011 of EUR82.6 million.

 

 

31 December,

31 December,

2011

2010

2011

2010

Number of options

Number of options

Weighted average exercise price

Weighted average exercise price

Outstanding at the beginning of the year

11,592,082

12,694,240

$4.57, £3.62

$5.12, £3.20

Granted during the year

2,331,650

1,958,000

£3.4386

£4.82

Forfeited

(876,434)

(665,718)

£3.8744

$6.61, £3.71

Exercised

(203,702)

(2,394,440)

$4.50, £2.22

$4.38, £1.92

Outstanding at the end of the year

12,843,596

11,592,082

$4.58, £3.59

$4.57, £3.62

 

 

§ the same taxable group company; or

 CONSOLIDATED BALANCE SHEET

The shifting balance in the poker market after the DoJ actions in April presented an opportunity for PTTS to attract some very high quality affiliates who had been historically active on behalf of some of the US-facing poker sites.

Prior to the formation of the above joint venture, in 2010 the Group paid a total amount of EUR2.4 million as contribution towards the purchase of gaming machines on behalf of the partnership.

 

The group paid an initial consideration, including working capital adjustments, of EUR37.7m (£33.2m) in cash and additional contingent consideration of EUR8.1m (£7.0m) was paid in March 2011 based on adjusted EBIT performance in 2010. When the Company assesses potential acquisition targets it is looking for a similar culture of service and innovation which is a significant factor in the decision-making process.

e) Capital disclosures

 

 

 

In January 2011, Playtech acquired Intelligent Gaming Systems (IGS) which provides information management systems for land-based casinos for an initial amount of £2.5 million with a further consideration, capped at £3.0 million, based on the profitability of the IGS business over the following three years. It also added scorecast betting to its product for Skybet, making it one of only two bookmakers able to offer this on their mobile platform; as well as working with a number of other leading UK bookmakers who had already launched or were preparing to launch on their platform. In accordance with IAS36, the Group will regularly monitor the carrying value of its interest in the IGS business.

Net cash and cash equivalents as at 31 December 2011 were EUR137.3 million (2010: EUR68.5 million), representing 18% (2010: 18%) of the Group’s total assets. The net cash and cash equivalents as at 31 December 2011 amounted to EUR137.3 million (2010: EUR68.5 million), representing 18% (2010: 18%) of the Group’s total assets, and further strengthened from the proceeds received as part of the shares placing towards the end of the year.

 

NOTE 6 – FINANCING INCOME AND COSTS

 

 

Playtech’s acquisitions have added market-leading new capabilities to the Group, filling important gaps in its wider suite of products that would have taken far longer to develop organically. Poker revenues decreased 20% to EUR21.8 million (2010: EUR27.4 million) reflecting the trends shown in the market, but improved later in the year. Investment in Sportech PLC

10,322

8,878

12,376

10,932

 

 

 

 

EUR000

 Cash consideration

8,000

 Contingent consideration

12,384

 Total cash consideration

      20,384

 Finance cost arising on discounting of contingent consideration

        (868)

 Fair value of consideration

19,516

 Cash purchased

       (169)

 Net cash payable (of which EUR8.0m was paid in the year)

19,347

 

b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. The weighted average cost of own shares held in treasury is £3.2849 per share.

Expiry date

Exercise price

2011

2010

Number

Number

Between 6 February 2011 and 11 December 2011

Between $4.35 and $5.75 and between £1.72 and £3.16

-

473,666

Between 15 May 2012 and 31 December 2012

Between $7.19 and $7.79 and between £3.3 and £3.96

310,333

1,164,333

Between 25 April 2013 and 31 December 2013

$4.35 and Between £3.1725 and £5.31

1,323,002

1,490,830

Between 22 May 2014 and 6 November 2014

Between £3.7 and £4.155

740,000

790,000

1 December 2015

$2.5and between £1.45 and £2.32

684,651

764,380

Between 6 February 2016 and 11 December 2016

Between $4.5 and $5.75 and between £1.72 and £3.16

1,891,383

1,484,383

Between 15 May 2017 and 31 December 2017

Between $7.19 and $7.79 and between £3.79 and £3.96

1,314,387

730,443

Between 25 April 2018 and 31 December 2018

$4.35 and between £3.1725 and £5.31

1,401,890

1,453,047

Between 22 May 2019 and 6 November 2019

Between £3.7 and £4.155

1,230,000

1,310,000

Between 18 April 2020 and 26 August 2020

Between £4.16 and £5.12

1,728,000

1,931,000

Between 10 March 2021 and 16 December 2021

 Between £2.3 and £3.5225

 

2,219,950

 

-

 

12,843,596

11,592,082

 

 

 

 

On 15 December 2011 the Group acquired 100% of the shares of Ash Gaming Limited (hereinafter “Ash Gaming”), the leading developers of interactive gambling and betting games.

§ the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

 

 

Long and short term deferred consideration balances of EUR75.3 million (2010: EUR15.0 million) represent the present value of repayments due on the initial consideration amounts for the PTTS acquisition. The share options plan does not have any performance conditions other than continued service. The Company’s strategy will centre on developing three key elements: products and services, turnkey solutions, and joint ventures to maximise the potential for revenue growth and market share in newly-regulating markets, regardless of how each jurisdiction chooses to regulate.”

S. The acquisition of PTTS in July delivered a step change in Playtech’s outsourced services capabilities and has enabled a one-stop full service turnkey solution to be offered.

Intangible assets comprise externally acquired patents, domains, and customer lists.

 

The financial information of the Company and its subsidiaries are prepared in Euro (the functional currency), which is the currency that best reflects the economic substance of the underlying events and circumstances relevant to the Group Transactions and balances in foreign currencies are converted into Euro in accordance with the principles set forth by International Accounting Standard (IAS) 21 (“The Effects of Changes in Foreign Exchange Rates”). When Playtech evaluates acquisition targets it looks to find teams of like-minded people who share its philosophy. The Group did not disclose the results of the Combined Group as if the VF acquisition had occurred on 1 January 2010 as they considered the amounts involved to be immaterial.

 

H. Income is recognised in the accounting periods in which the gaming transactions occur or the services are rendered. During the year the team at IGS has worked to prepare an end-to-end solution for Aspers Stratford, the first large casino under the 2005 UK Gaming Act, and as part of the consortium which won a tender to provide a visitor registration system for all casinos in Sweden.

Playtech has also undertaken a significant amount of preparatory work to secure new joint venture partnerships, two of which – Gauselmann and Peermont – were announced shortly after the year end in January 2012. At that date, the share price was £0.245.

 

 

For the IGS CGU with carrying value of EUR4.4 million (2010: EURnil): Discount rate of 15.5% which is based on the Group’s WACC to reflect management’s assessment of specific risks related to the goodwill. This, combined with a number of exciting new and potential joint venture partnerships, new licensee prospects and continued opportunities from the changing regulatory landscape, positions Playtech for continued success and the Company looks to the future with great optimism.

Playtech continues to be a highly cash generative business and benefits from dividends received from its minority interest in WH Online. Another highlight of the year was the Bingo team’s recognition at the B2B industry awards where Playtech won Best Bingo Software.

 

Management has reviewed the key assumptions and forecasts for the above mentioned assets and the result of the review indicated that there was no impairment of the Group’s investment in WH Online at 31 December 2011.

 

 

Included in technology IP and in development costs assets acquired under business combinations – are EUR2.4m in respect of the Ash Gaming acquisition (see note 25)

The fair value together with the carrying amount of the financial assets and liabilities shown in the balance sheet are as follows:

IFRS 7 (Amended) – Transfers of Financial Assets (effective for annual periods beginning on or after 1 July 2011);

Playtech Ltd

Ross Hawley, Director of Investor Relations

c/o Pelham Bell Pottinger

 

+44 (0) 20 7861 3232

 

 

 

Collins Stewart

Piers Coombs / Bruce Garrow

 

+44 (0) 20 7523 8350

 

 

Pelham Bell Pottinger

David Rydell / Olly Scott / Guy Scarborough

+44 (0) 20 7861 3232

 

 

Overview

 

At 31 December 2011 the recoverable amount of the CGU’s has been determined from value in use calculations based on cash flow projections from the formally approved budget for 2012 and detailed projections covering the periods as noted below.

 

 

During the year 203,702 (2010 – 2,394,440) share options were exercised.

§ GTS 2010 Company Share Option Plan (“CSOP”), options granted under the plan vest on the first day on which they become exercisable which is three years after grant date.

 

 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

 

Foundation Group Limited and AsianLogic entered into software license agreement as part of the shares acquisition in 2007. The cost of treasury shares held is presented as a separate reserve (the “treasury share reserve”). In accordance with IAS 28, profits distributed to the Group in proportion of their respective shareholding have been recognised as share of profits of associates. However, the functional currency of those operations is the same as the Group’s primary functional currency (Euro) and the Group is not substantially exposed to fluctuations in exchange rates in respect of assets held overseas.

 

 

O. The platform will support Gala Coral’s entire online product range, including sports betting, and the migration is due to commence towards the end of the first half of 2012.

 

 

           

 

 

The above balances relate to customers with no default history.

NOTE 21 – LOANS AND BORROWINGS

 

 

 

 

 

Gamepark Trading Ltd, Tech Corporation and 800pay Ltd were previously related by virtue of a common significant shareholder, however on 1 July 2011, they sold their assets to PTTS subsidiary companies immediately prior to the acquisition by Playtech (as referred to in note 25). This does not reflect the region of the end users of the Group’s licensees whose locations are worldwide.

 

In terms of delivery, human capital is as critical as financial capital. Total net contributions of EUR6.0 million for the purchase of gaming machines have been made during 2011 and 2010.

 

EUR000

EUR000

 

Cash consideration

 

13

Additional paid in capital

477

Contribution in kind

216

Share of loss in Sciplay

(368)

Total share of loss in Sciplay

(152)

Investment in Sciplay as at 31 December 2010

338

Additional paid in capital

612

Share of loss in Sciplay

(618)

Investment in Sciplay as at 31 December 2011

332

 

31 December,

2011

2010

EUR000

EUR000

Suppliers

8,577

3,986

Customer liabilities

7,915

7,971

Related parties (Note 27)

75

443

Other

1,111

613

17,678

13,013

 

 

 

Playtech’s strategy of organic development and targeted acquisitions has enabled us to maximise our opportunities from the significant changes that are being experienced as the online gambling industry becomes increasingly sophisticated.  These are the Group’s only financial assets and liabilities which are measured at fair value.

E.

“In view of the Company’s Board changes and progress in the last year, Playtech looks forward to an exciting year ahead with potential new joint venture partnerships, new licensee prospects and a commitment to joining the Main Market.”

 

The following describes the nature and purpose of each reserve within owner’s equity:

 

 

a) Interest rate risk

2011

2010

EUR000

EUR000

Net profit

77,696

64,670

Amortisation on acquisitions

    15,838

    7,516

Amortisation of investment in WH Online

5,729

8,266

Finance costs – movement in deferred and contingent consideration

     6,075

     736

Employee stock option expenses

4,678

5,855

Professional costs on acquisitions

     1,488

     1,802

One-off legal costs relating to the litigation with William Hill

1,389

-

Decline in fair value of available for sale investments

     551

     2,223

Exchange differences on deferred consideration

(26)

1,200

One-off tax (credit)/charge

(571)

939

Adjusted net profit

112,847

93,207

Adjusted net profit margin

46%

54%

Adjusted basic EPS (in Euro cents)

46.2

38.5

Adjusted diluted EPS (in Euro cents)

45.7

    37.1

 

 NOTE 31 – CONTINGENT LIABILITIES

The total consideration of EUR27.4 million (£23.0 million) was paid in cash, of which EUR8.9 million (£7.5 million) was paid into an escrow account to be held and released to the vendors over the next three years, depending upon the successful completion of certain conditions and indemnities.

 

The following transactions arose with related parties:

The tax charge for the year can be reconciled to accounting profit as follows:

 

 Book value prior to acquisition

 Adjustments

 Provisional fair value on acquisition

EUR000

 EUR000

EUR000

Property, plant and equipment

17

-

17

Intangible assets (Customer list)

1,000

3,563

4,563

Trade and other receivables

406

-

406

Cash and cash equivalents

169

-

169

Trade and other payables

(374)

-

(374)

Deferred tax liability

-

(937)

(937)

Net identified assets

1,218

2,626

3,844

Provisional goodwill

15,672

Fair value of consideration

19,516

 

Movements in the carrying value of the investment during the year are as follows:

Aggregated amounts relating to the Sciplay joint venture are as follows:

Roger Withers, Non-executive Chairman, said:

§ The discount rate assumed is equivalent to the WACC for the IP Technology and the customer relationships.

 For the year ended

 For the year ended

 31 December 2011

EUR cents

 31 December 2010

EUR cents

Basic – adjusted

 46.2

38.5

Diluted – adjusted

45.7

37.1

EUR000

EUR000

Profit for the year

77,696

64,670

Decline in fair value of available for sale investments

551

2,223

Amortisation on acquisitions

15,838

7,516

Amortisation of intangibles in associate

5,729

8,266

Movement in deferred and contingent consideration

6,075

736

Employee stock option expense

4,678

5,855

Professional expenses on acquisition

1,488

1,802

One- off legal costs related to the litigation with WHO

1,389

-

Previous year taxes

(571)

939

Exchange differences – on deferred consideration

(26)

1,200

Adjusted profit for the year

112,847

93,207

Number

Number

Denominator – basic

Weighted average number of equity shares

244,113,262

242,011,308

Denominator – diluted

Weighted average number of equity shares

244,113,262

242,011,308

Weighted average number of option shares

  3,066,593

  9,173,326

Weighted average number of shares

247,179,855

  251,184,634

 

As at 31 December 2011, out of the entire share options outstanding, 9,716,729 (2010 – 2,089,468) have been excluded from the calculation of diluted EPS as their exercise price is greater than the weighted average share price during the year (i.e. As a marketing tool, such wins and the continual availability of a number of million dollar jackpots is invaluable to operators, large or small.

Bingo

 

Intangible assets as at 31 December 2011 totalled EUR365.2 million (2010: EUR100.4 million). The Group’s share of post-acquisition profits and losses is recognised in the consolidated statement of comprehensive income except that losses in excess of the Group’s investment in the associate are not recognised unless there is an obligation to make good those losses.

Subsequent expenditures are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Group and the cost of the item can be measured reliably. These include Casino Gran Madrid which is already operating under a licence in the Madrid municipal area, and a number of others who are ready to offer their services to players as soon as the licensing regime will allow it. Goodwill

The Group has a share based remuneration scheme for employees. The diluted EPS for the year was 31.4 EUR cents, based on weighted average number of shares of 247.2 million (2010: 25.7 EUR cents, 251.2 million shares). Reserves

§ Recommended combined interim and final dividend for 2011 of 16.5 EUR cents per share

Q. As part of the Board’s ongoing regulatory compliance process, the Board continues to monitor legal and regulatory developments and their potential impact on the Group.

 

 

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. These options are settled in equity once exercised. Acquisition of Mobenga AB Limited

 

 

On 10 March 2011 the Group entered into an agreement to purchase 100% of the issued share capital of PT Turnkey Services Limited (hereinafter “PTTS”) from Worldwide Online Enterprises Limited (hereinafter “WOE”). – derived from prices) (Level 2); and

For options granted on 18 April 2010, 3 June 2010 and 24 August 2010

Dividend yield (%)

2.8%-2.85%

Expected volatility (%)

42.1% to 53.0%

Risk free interest rate (%)

1.30% to 2.63%

Expected life of options (years)

3.61 to 4.61

Weighted average exercise price

£4.82

 

Amount

Amortisation

EUR000

%

Customer list

8,999

8

Brand

861

16.67

Total intangible assets

9,860

 

 For the year ended

 For the year ended

 31 December 2011

EUR000

 31 December 2010

EUR000

Profit before tax

78,663

67,013

Tax at effective rate in Isle of Man

-

-

Higher rates of current income tax in overseas jurisdictions

1,866

1,685

Adjustments in respect of previous periods

(571)

939

Effect of deferred tax originating in overseas jurisdictions

(338)

(281)

Total tax charge

957

2,343

 

§ Gross income* up 41% to EUR243.6 million (2010: EUR173.1 million)

 

 

Wherever possible and commercially practical the Group invests cash with major financial institutions that have a rating of A- as defined by Standard Poors. The principal annual rates used for this purpose, which are consistent with those of the previous years, are:

Amount

Amortisation

EUR000

Customer list

66,994

Over 12.5 years, in line with projected cash flows

Affiliates program

64,554

Total intangible assets

131,548

 

Videobet has gone from strength to strength in 2011 in what has been a transformational year for the business as it has moved from a development phase through into profit due to significant revenues from The Global Draw UK contracts. This additional resource will be used to take much of the pressure off Playtech’s lead development centres in Estonia and Bulgaria, and the Company will continue to look for other ways to enhance this capacity. These comprise four separate service offerings – marketing, operations, payment advisory and network management.

Playtech Limited (the ‘Company’) was incorporated in the British Virgin Islands on 12 September, 2002 as an offshore company with limited liability. No other differences exist between the basis of preparation of the performance measures used by management and the figures in the group financial information.

Intangible assets and property, plant and equipment are amortised or depreciated over their useful lives. (2010: EUR142.3 million).

 

In accordance with IAS 36, the Group regularly monitors the carrying value of its intangible assets, including goodwill.

 

 

 

 

Improvements to IFRSs (2010) (effective for annual periods beginning on or after 1 January 2011).

The adjusted earnings per share present the profit for the year before charging professional costs on acquisitions, legal costs related to the litigation with WHO, previous year’s taxes and after various non-cash charges relating to acquisitions and investments together with the employee stock option plan. This caused an exchange rate income in the amount of EUR0.3 million that was reflected in the consolidated statement of comprehensive income in 2010.

 

Poker

 

 

 

The Group’s balance sheet is exposed to market risk by way of holding some investments in other companies on a short term basis (note 14).

The impact of smart phones and content-rich Apps has led to profound changes in the way businesses interact with their customers and Playtech is leading the way in the gaming sector by producing innovative features that will benefit its licensees in this important developing market. These items made up 73% of Playtech’s adjusted operating expenses. Management has determined the fair value of contingent consideration using valuation techniques taking into account the probability of expected outcomes and appropriate discount rates.

 

The deferred tax liability is due to temporary differences on the acquisition of certain businesses in the year

 

 

 

(‘Playtech,’ ‘the Company’ or ‘the Group’)

Casino produced a stand-out performance in 2011 as revenues grew by 18%, as a result of a mix of organic growth and new licensees. The risk management policies employed by the Group to manage these risks are discussed below. Carrying amounts are reviewed on each balance sheet date for impairment.

 

 

Offsetting Financial Assets and Financal Liabilities (Amendments to IAS 32) (effective for annual periods beginning on or after 1 January 2014);

 

 

2011

2010

EUR000

EUR000

Investment in equity accounted associates and joint ventures comprise:

A. All such intangible assets are stated at cost less accumulated amortisation. An impairment loss recognised for goodwill is not reversed.

At the time of the placing last year we confirmed that our new dividend policy going forward would target a 40% payout of adjusted net profit, and that Playtech would move to a one-third interim – two thirds final dividend payment structure. Further information in relation to the determination of the fair value of contingent consideration is given in note 25.

Any premium paid for an associate above the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised as goodwill and included in the carrying amount of the associate.

 

 

On January 2011 each of the parties paid additional paid in capital of EUR524,000 (EUR251,000 to Sciplay International Sarl and EUR273,000 to Sciplay (Luxembourg) Sarl) and on July 2011 each of the parties paid additional paid in capital of EUR88,000 to Sciplay (Luxembourg) Sarl.

2011

Number of shares in issue:

EUR000

At 1 January 2011

242,599,019

Share placing in year

46,511,627

Exercise of share options

203,702

At 31 December 2011

289,314,348

 

Amortisation is calculated using the straight-line method at annual rates estimated to write off the costs of the assets over their expected useful lives and is charged to operating expenses from the point the asset is brought into use.

 

The deferred consideration as of 31 December 2010 of EUR15.0 million was paid in full during the year. During 2011, the company paid EUR45.0 million in accordance with the initial cash consideration schedule.

 As of

 As of

 31 December 2011

 31 December 2010

Note

 EUR000

 EUR000

 NON-CURRENT ASSETS

 Property, plant and equipment

10

   21,548

   12,876

 Intangible assets

11

365,201

100,384

 Investments in equity accounted associates joint ventures

12

    

162,997

    

162,583

 Available for sale investments

41

      12,376

      10,932

 Other non-current assets

15

2,820

6,070

564,942

     292,845

 CURRENT ASSETS

Trade receivables

16

      21,007

      13,385

Other receivables

17

      20,228

      9,364

 Cash and cash equivalents

18

     164,832

      68,519

206,067

91,268

 TOTAL ASSETS

771,009

384,113

 EQUITY

 Additional paid in capital

     307,853

     189,690

Available for sale reserve

14

1,995

-

Retained earnings       

168,891

110,260

Equity attributable to equity holders of the parent

19

478,739

     299,950

Non-controlling interest

(49)

-

TOTAL EQUITY

478,690

299,950

 NON CURRENT LIABILITIES

Loans and borrowings

21

13,746

-

Other non-current liabilities

20

1,423

953

Deferred revenues

14

      8,919

     11,469

Deferred tax liability

23

5,287

       1,950

Deferred consideration

13

41,752

-

Contingent consideration

13

110,985

5,474

182,112

19,846

 CURRENT LIABILITIES

Loans and borrowings

21

13,787

-

Trade payables

22

      17,678

      13,013

Progressive and other operators’ jackpots

20,491

12,847

Tax liabilities

1,837

1,499

Deferred revenues

14

       4,986

       3,644

Deferred consideration

13

33,591

15,001

Contingent consideration

13

929

11,059

Other payables

24

16,908

      7,254

110,207

64,317

 TOTAL EQUITY AND LIABILITIES

771,009

384,113

The financial information were approved by the Board and authorised for issue on 15 March 2012.

 

 Mor Weizer

David Mathewson

 Chief Executive Officer

Chief Financial Officer

 

 

2011

2010

EUR000

EUR000

Total assets

28,764

-

Total liabilities

226

-

Revenues

2,881

-

Profit

400

-

 

 

 

F. Playtech’s reach extends further than traditional online gaming and now includes other channels, such as mobile and tablet, live broadcast and TV, and land-based gambling, and we are unique in the breadth of our capabilities. Provisions

Book value prior to acquisition

 Adjustments

 Provisional fair value on acquisition

EUR000

 EUR000

EUR000

Property, plant and equipment

654

-

654

Trade and other receivables

411

-

411

Cash and cash equivalents

338

-

338

Trade and other payables

(346)

-

(346)

Other payables

(1,456)

-

(1,456)

Net identified liabilities

(398)

-

(398)

Provisional goodwill

339

Non-controlling interest

59

Total consideration

-

 

Certain employees participate in the Group’s share option plans which commenced with effect from 1 December 2005. As a dynamic Non-Executive Director he fully engaged with the business and since moving to the executive team has become a key contributor to both financial management and external relationships.”

After excluding the influence of the acquisitions this year, employee related costs increased by 20% principally due to an increase in organic headcount. In the US there has been some positive momentum and increasing clarity over certain fundamental issues. On 27 January 2010, the Group acquired a 9.99% stake in Sportech PLC, a UK’s leading pari-mutuel football gaming business, and owner of The New Football Pools, for a total consideration of EUR11.3 million. Of this growth, existing licensees delivered 13%, Videobet’s new UK revenues contributed 3%, and WH Online grew by 3%, with a further 2% increase over 2010 coming from new business, defined as licensees or products which had been launched within the past 18 months. Investment in Sciplay

332

338

C. These deposit accounts are short term and the Group is not unduly exposed to market interest rate fluctuations.

 

There were a number of other licensees who came on stream in 2011, or added new products to their product suite, along with a substantial number of licensees entering newly regulated markets, such as Italy and Denmark, or are poised to enter the Spanish market when it regulates. As a B2B service provider Playtech is committed to delivering timely and high quality product to its clients. Other markets, including Belgium and the Netherlands, possess attractive opportunities for incremental revenues. In addition it received EUR35.1 million (2010: EUR32.3 million) of WH Online dividend receipts in the year.  This was accounted for as a loan to ITL within non-current assets, as at 31 December 2010. Playtech has maintained a careful focus on managing cost inflation across the business, and other cost line items have remained relatively steady.

 Book value prior to acquisition

 Adjustments

 Provisional fair value on acquisition

EUR000

 EUR000

EUR000

Property, plant and equipment

123

-

123

Intangible assets

2,439

9,860

12,299

Trade receivables

1,694

-

1,694

Other receivables

243

-

243

Cash and cash equivalents

327

-

327

Trade payables

(173)

-

(173)

Other payables

(1,331)

-

(1,331)

Deferred revenues

(454)

-

(454)

Tax liability

(10)

(2,465)

(2,475)

Net identified assets

2,858

7,395

10,253

Provisional goodwill

16,214

Fair value of consideration

26,467

Cash purchased

(327)

Net cash paid

26,140

 

 

IAS 24 (Revised) – Related Party Disclosures

 

 

 

C.

 

Playtech’s strategy seeks to capitalise on the Company’s belief that an increasing number of local jurisdictions around the world will seek to regulate online gaming and that it is these territories which will drive and accelerate industry growth as both new players and local operators look to participate in a regulated marketplace.

The fair value of quoted investments is based on published market prices.

 

 

In June 2011, the Company purchased 100,000 ordinary shares of no par value to be held as treasury shares. Interest expense in this context includes initial transaction costs and premia payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

 

 

Roger Withers, chairman of the Group during the year, was appointed as a Director of Sportech PLC in 2011

 

 

 

 

 

 

NOTE 11 – INTANGIBLE ASSETS 

§ Four Technology acquisitions since January 2011 all performing strongly: Intelligent Gaming, Mobenga, Ash Gaming and Geneity bring additional scale and capabilities in growth areas

f) Liquidity risk

d) Equity price risk

 

%

Software

10

Customer relationships

71

Affiliate contracts

52

WH Brands

7

Purchased assets brands

10

Covenant not to compete

20

 

Like-for-like growth in daily average revenues for the first nine weeks of 2012 are up over 23% compared to the same period in 2011. When taken together with the other acquisitions in the year, this makes certain historic comparisons harder to present. Where cash is on deposit with maturity dates greater than three months, it is disclosed within other receivables.

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated income statement.

 

 

                         

** Adjusted EBITDA, adjusted EPS and adjusted net profit are calculated after adding back certain non-cash charges, cash expenses relating to professional costs on acquisitions, legal costs relating to litigation with William Hill and prior year taxes (see reconciliation in Financial and Operating Overview below)

Gala Coral’s decision to move its entire online gaming operation on to Playtech’s system served as a significant endorsement of its market-leading technology platform. While PTTS was the most significant transaction, there have been four other acquisitions in the period, including January 2012, which together have brought substantial new depth to Playtech’s cross platform and content capabilities, as well as a significantly enhanced sports book capability. Through this multi-channel approach, we believe that Playtech will be in a position to maximise the potential for growth and market share in newly-regulating markets in addition to strengthening the existing relationships with traditional online gaming operators. A reconciliation of the movement in issued shares is below:

In thousands of Euro

Total

Not past due

1-2 months overdue

More than 2 months past due

As at 31 December 2011

21,007

13,607

5,380

2,020

As at 31 December 2010

13,506

8,807

3,885

814

 

Overall, Playtech’s iPoker network has maintained its position as the leading independent poker network in the dot.com marketplace, and offered over EUR25 million in tournament prizes. An impairment charge of EUR0.6 million (2010 – EUR2.5 million) has been recognised in the consolidated statement of comprehensive income during the six months ended 30 June 2011.

The increase in the finance costs on the movement of deferred and contingent consideration is mainly due from the acquisition of PTTS, where the consideration is substantially deferred. Option prices are either denominated in USD or GBP, depending on the option grant terms.

The Group’s balance sheet at 31 December 2011 includes available for sale investments with a value of EUR10.3m which are subject to fluctuations in the underlying share price.

The results of the review indicated that there was no impairment of goodwill at 31 December 2011.

Long term and short term contingent consideration of EUR111.9 million represents the fair value of the contingent consideration that may come due for the investment in PTTS of EUR98.6 million and the acquisition of the Mobenga and IGS businesses of EUR13.3 million.

 

 

§ The discount rate assumed is equivalent to the WACC for the IP Technology and the customer relationships.

 

 

Investment in International Terminal Leasing and Intelligent Gaming Systems Limited

 

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. The impact of the modification was to recognise an incremental fair value charge of EUR1.7m during 2011 (2010- EUR2.3m).

 

Movements in the carrying value of the investment during the year are as follows:

 

Whilst 2011 has been characterised by a series of exciting new developments on the operational side of the business, Playtech has not lost sight of its strategic goal to qualify for a Premium Listing on the London Stock Exchange.

For further information contact:

The key assumptions used by management to determine the value in use of the customer relationships and Affiliates program within PTTS business are as follows:

Name

Country of incorporation

Proportion of voting rights and ordinary share capital held

Nature of business

Playtech Software Ltd

British Virgin Islands

100%

Main trading company of the Group, owns the intellectual property rights and licenses the software to customers.

OU Playtech (Estonia)

Estonia

100%

Designs, develops and manufactures online software

Techplay Marketing Ltd

Israel

100%

Marketing and advertising

Video B Holding Ltd

British Virgin Islands

100%

Trading company for the Videobet software, owns the intellectual property rights of Videobet and licenses it to customers.

OU Videobet

Estonia

100%

Develops software for fixed odds betting terminals and casino machines (as opposed to online software)

Playtech Bulgaria

Bulgaria

100%

Designs, develops and manufactures online software

PTVB Management Ltd

Isle of Man

100%

Management

Playtech (Cyprus) Ltd

Cyprus

100%

Dormant

Playtech Live Ltd

British Virgin Islands

100%

Dormant

Networkland Ltd

British Virgin Islands

100%

Dormant

Playtech Bingames Ltd

British Virgin Islands

100%

Technical support

Evermore Trading Ltd

British Virgin Islands

100%

Holder of convertible notes in Foundation

Playtech Software India Ltd

India

100%

Designs, develops and manufactures online software

Genuity Services Ltd

British Virgin Island

100%

Holder of investment in WH Online

Playtech Services (Cyprus) Ltd

Cyprus

100%

Activates the Italian ipoker Network

VB (Video) Cyprus Ltd

Cyprus

100%

Trading company for the Videobet product to Romanian companies

Guideview Trading Limited

Cyprus

100%

Licenses Software to companies

Playtech Sports Limited

British Virgin Islands

100%

Holds sports betting IP

Regisol Holdings Limited

Cyprus

100%

Dormant

Playtech Software Bulgaria EOOD

Bulgaria

100%

Dormant

Makemoreprofit Investments Ltd

British Virgin Islands

100%

Holder of Guideview Trading Limited

Techplay S.A. The results of the reviews indicated that there was no impairment of the intangible assets at 31 December 2011.

 

In consideration, the Group will pay an initial amount of EUR140 million, reduced by estimated working capital adjustment of EUR14.8 million, to be spread over instalments during the next two years, plus up to EUR140 million contingent consideration depending on adjusted EBITDA performance in 2014, to be spread over instalments during the following 18 months.

 

As at 31 December 2011 the Group holds undrawn credit facilities of EUR82.6 million (2010 – EUR50 million).

 

 

There will be a meeting and presentation for analysts commencing at 9.30 am on Thursday 15 March, 2011 at The Lincoln Centre, 18 Lincolns Inn Fields, London, WC2A 3ED.

31 

December

31 

December

Note

2011

2010

EUR000

EUR000

Non-current deferred consideration consists:

Acquisition of PT Turnkey Services Limited

25b

41,752

-

41,752

-

Current deferred consideration consists:

Investment in William Hill Online

12a

-

15,001

Acquisition of PT Turnkey Services Limited

25b

33,591

-

33,591

15,001

 

 

 

Reported net profit and earnings per share

IFRS 10 Consolidated Financial information;

 

 

For Playtech there were significant combined benefits to be gained from the acquisition, including greater revenue opportunities; enhanced economics across the value chain; and a deepening of the overall relationship with a number of significant operators in the UK, Continental Europe and other regulated markets. The loan is payable in eight quarterly installments starting March 2012. In Denmark the GTS team was active in advance of new regulations, and also completed its final integration phase with the bingo product. Revenue recognition

 

 

 

 

 

N. Goodwill is allocated on initial recognition to each of the group’s cash generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill.

 NOTE 20 – NON CURRENT LIABILITIES

 

 

Income receivable from contracting parties comprises a percentage of the revenue generated by the contracting party from use of the Group’s intellectual property in online gaming activities and land based gaming operations, and from fees charged for services rendered. Maximum consideration payable is capped at EUR23.8 million.

In total during the year over 15 new licensees joined the Playtech platform or added new products, including major operators such as Gala Coral, PaddyPower and COPA. The Group maintains monthly operational balances with banks that do not meet this credit rating in Israel and in the Philippines to meet local salaries and expenses. These costs have continued to increase as branded games increase in popularity and grow in accordance with the growth of our licensees. Variations in market value over the life of these investments have or will have an impact on the balance sheet and the income statement.

 

The Group’s investment in a jointly controlled entity is included in the financial information under the equity method of accounting.

Provision for income taxes is calculated in accordance with the tax legislations and applicable tax rates in force at the balance sheet date in the countries in which the Group companies have been incorporated. This reflects the Group’s continued investment in the additional teams required in regulated or soon to be regulated markets and in preparation for key projects. These plans remain on track and the Company intends to make the move as soon as practically possible.

The acquisition of IGS brought a highly regarded management team and software development capability in an area that is complementary to Playtech’s existing business, particularly Videobet, and enhances Playtech’s cross platform capability. Of the remaining EUR7.9 million (2010: EUR6.2 million), EUR5.8 million (2010: EUR4.7 million) was from internally generated development costs and EUR2.1 million (2010: EUR1.5 million) related to other intangibles.

On 26 January 2011, the Group acquired 100% of the shares of Intelligent Gaming Systems Limited (hereinafter “IGS”). The group includes the assets it controls, its share of any income and the liabilities and expenses of jointly controlled operations and jointly controlled assets in accordance with the terms of the underlying contractual arrangement.

 

NOTE 17 – OTHER RECEIVABLES

Goodwill represents the excess of the cost of a business combination over, in the case of business combinations completed prior to 1 January 2010, the Group’s interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired and, in the case of business combinations completed on or after 1 January 2010, the total acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired.

E. The computed fair value at acquisition is presented in the table below, and the undiscounted range of possible payments is between EURnil and EUR140 million.  

 

 

B.

 

 

 

Acquisitions

 

 

 

 

Playtech’s acquisitions have continued to deliver significant benefits in terms of product capability and licensee relationships, and bringing senior management expertise to the Group. Investment in Sciplay

 

 

Branded games are a valuable marketing tool for Playtech and the Company has the largest portfolio of games available across delivery channels including online, mobile and gaming terminals. 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.

Operating profit is stated after charging:

Our Services product contributed EUR43.0 million (2010: EUR1.1 million), which was principally a six month contribution from PTTS, acquired on 1 July 2011.

g) Total financial assets and liabilities

 

A. Goodwill is not amortised and is reviewed for impairment, annually or more specifically if events or changes in circumstances indicate that the carrying value may be impaired.

Financial highlights

 

 

 

On 24 January 2012, the Group acquired 100% of the issued share capital of Geneity Limited (“Geneity”) shares, a UK based provider of e-gaming software products, focused primarily on the sportsbook and lottery sectors, for an initial cash consideration of £11 million (subject to a working capital adjustment), of which £4 million will be held in escrow for 30 months.

A. The fair value of the options granted is charged to the consolidated statement of comprehensive income 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. The revenues are being recognised over the remaining lifetime of the software license agreement, and as at 31 December

 

The significant accounting policies followed in the preparation of the financial information, on a consistent basis, are:

§ The income approach, in particular, the relief of royalty approach was applied for the valuation, considering projected revenues derived from the business.

 

Products

 

 

Management have not disclosed IGS’s contribution to the Group profit since the acquisition date nor have they disclosed the impact the acquisition would have and on the Group’s revenue and profits if it had occurred on 1 January 2011, because the amounts are not material.

 

 

 

Foreign exchange risk also arises when Group operations are entered into in currencies denominated in a currency other than the functional currency. Impairment

 

 

 

 

 

A change of 1% in shares price will have an impact of EUR0.1m on the consolidated statement of comprehensive income and the fair value of the available for sale investments will change by the same amount.

A significant development during the year was the new mini-games platform, which lets players enjoy their favourite casino games and newly offered ones while they are interacting online with live poker, live casino, or web.

§ The income approach, in particular, the relief of royalty approach was applied for the valuation, considering projected revenues derived from the business.

§ The growth rates and attrition rates were based on market analysis.

 

 

 

 

 

 

E. Accordingly prioritising development projects and their impact on the Company’s growth is a significant focus for management. The prior year balance relates to the final repayment in relation to the WH Online transaction in 2008.

Long term liabilities are those liabilities that are due for repayment or settlement in more than twelve months from balance sheet date.

 

 

 

Gross income and total revenues

 

The main factors leading to the recognition of goodwill are the synergistic growth and revenues expected to be created by the combined highly complementary business activities and the strengthening of the Group’s position in comparison to its competitors in the market. at the time of the transaction. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

 

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The previous year’s taxes in 2010 of EUR0.9m were due to the finalisation of tax assessments relating to 2006.


Operational highlights

The deferred tax is due to the reversal of temporary differences arising on the acquisition of certain businesses in the current and prior year.

 

In a year characterised by significant change in the online gaming market and a challenging macroeconomic environment, Playtech has once again achieved strong growth and passed significant milestones.

The Group’s policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due.

On 31 August 2011 the Group acquired 100% of the issued share capital of Mobenga AB (‘Mobenga’), the leading mobile sportsbook betting platform provider and has a fast growing base of customers.

 

Adjustments to fair value include the following:

Management considers that the Group’s activity as a single source supplier of online gaming solutions constitutes one operating and reporting segment, as defined under IFRS 8. The Group’s income and operating cash flows are substantially independent of changes in market interest changes.

Current trading

2011

2010

EUR000

EUR000

Total assets

1,225

1,094

Total liabilities

416

426

Revenues

-

-

Loss

(1,236)

(736)

The investment in Sciplay was sold to Scientific Games on 23 January 2012 for EURnil consideration.

 

Revenues from Videobet totalled EUR7.8 million (2010: EUR2.0 million), due to the completion in the second quarter of the year of the roll out of the UK Global Draw contract. However, the group’s share of profit is expected to be between 20% – 50%. These balances are kept to a minimum and typically do not exceed EUR1 million at any time during the monthly payment cycle.

§ Agreements with major operators for new products, including: Betfair, Gala Coral, Paddy Power, Boylesports, SNAI, Sisal, Caliente, COPA and others

 

 

The Group is subject to income tax in jurisdictions in which it is registered and judgment is required in determining the provision for income taxes. Financial expenses comprise EUR6.1 million relating to the movement in deferred and contingent consideration. Adjusted earnings per share

On 1 July 2010, the directors approved an amendment to the Plan, to extend the time during which options can be exercised from five years to ten years. In the current year the Group has adopted all of the new and revised standards and interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, as they have been adopted by the European Union, that are relevant to its operations and effective for accounting periods beginning on 1 January 2011. Goodwill is allocated to 6 (2010 – 3 cash generating units (“CGU”)), and the carrying values are below. More details are included in note 7.

 

 

 

 

 

G. The Combined Group revenues as if the PTTS acquisition had occurred on 1 January 2011 would have been higher by EUR39.2 million, the Combined Group profits by EUR1.4 million, the Combined Group adjusted EBITDA and adjusted net profit (excluding the impact of finance costs on deferred and contingent consideration) would have been higher by EUR10.6 million and EUR9.0 million respectively.

 

NOTE 7 – TAXATION

 

 

a) New standards, interpretations and amendments effective from 1 January 2011

 For the year ended

 For the year ended

 31 December 2011

EUR000

 31 December 2010

EUR000

Gibraltar

54,813

44,149

Canada

65,185

42,809

Curacao

11,755

14,752

Philippines

20,941

9,855

Rest of World

54,791

30,730

207,485

142,295

 

Details of the provisional fair value of identifiable assets and liabilities acquired from subsidiaries, purchase consideration and goodwill are as follows:

For the Ash Gaming CGU with carrying value of EUR26.1 million (2010: EURnil): Discount rate of 15.5% which is based on the Group’s WACC to reflect management’s assessment of specific risks related to the goodwill. The principal annual rates used for this purpose, which are consistent with those of the previous years, are:

During 2011 the Group received a dividend of EUR3.1 million (2010 – EUR1.1 million) that has been reflected in the consolidated statement of comprehensive income as finance income.

Having completed the Global Draw roll-out, Videobet has focused its attention on international markets for new machine deployments, as well as moving to a monthly new content roll-out to the existing estates. Netplay TV PLC, Sceptre Leisure Plc are related by virtue of a common significant shareholder. The recoverable amount is determined based on value in use calculations.

Assets acquired on previous year’s business combinations of EUR1.2m relates to adjustments made to the GTS goodwill as a result of the finalisation of the contingent consideration during the year.

 

B. IGS is a provider of software based casino management systems to land-based casinos.

STRONG ORGANIC GROWTH, 2011 ACQUISITIONS POSITION GROUP FOR CONTINUED EXPANSION

Aggregated amounts relating to associates are as follows:

 

 

 

NOTE 4 – SEGMENT INFORMATION

 

Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income, except to the extent they reverse gains previously recognised in the consolidated statement of comprehensive income. In Denmark Playtech has seven licensees and a larger number in readiness in Spain. Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.

Patents Domain names

Technology IP

Development costs

Customer

List Affiliates

Goodwill

Total

EUR000

EUR000

EUR000

EUR000

EUR000

EUR000

Cost -

As of 1 January, 2011

7,897

7,702

24,086

52,414

36,635

128,734

Additions

79

-

9,542

287

-

9,908

Assets acquired on previous years business combinations

-

-

-

-

(1,200)

(1,200)

Assets acquired on business combinations

965

4,721

655

144,256

129,285

279,882

As of 31 December, 2011

8,941

12,423

34,283

196,957

164,720

417,324     

Accumulated amortisation

As of 1 January, 2011

1,857

1,986

9,113

15,394

-

28,350

Provision

836

2,570

5,805

14,562

-

23,773

As of 31 December, 2011

2,693

4,556

14,918

29,956

-

52,123

Net Book Value –

As of 31 December, 2011

6,248

7,867

19,365

167,001

164,720

365,201

 

Mobenga will facilitate the integration of Playtech’s platform with other mobile gaming offerings, such as casino and games, positioning the Company as the market-leading mobile gaming provider across a broad range of products.


CONSOLIDATED STATEMENT OF CASH FLOWS

Purchases and sales of available for sale financial assets are recognised on settlement date with any change in fair value between trade date and settlement date being recognised in the available for sale reserve.

 

 

Note

 

For the year ended 31 December 2011

For the year ended 31 December 2010

EUR000

EUR000

A.

In the current year, there were 2 licensees who individually accounted for more than 10% of the total revenue of the group (2010 – 2 licensees). Foreign currency

Playtech achieved a robust top line financial performance with strength across all product channels. The main purpose of these financial instruments is to raise finance for the Group’s operation.

The details of key management compensation (being the remuneration of the directors) are set out in note 5.

Given the placing had a material impact on the shares in issue only at the very end of the year, the Board has looked to reflect the implied amount that would have been declared under the new policy at the interim level on the basis of the shares in issue at that time, and the final dividend on the current number of shares in issue. Fair value is determined by the Black-Scholes and Binomial valuation model. Acquisition of Virtue Fusion

8,122

26,136

97,189

26,136

 

 

 

 

On 12 February 2010 the Group entered into an assets purchase agreement with Virtue Fusion Limited, the leading developer and licensor of online bingo products.

 

 

 

2011

EUR000

2010

EUR000

Provision at the beginning of the year

121

146

Charged to income statement

2,019

64

Utilized

(311)

(89)

Provision at end of year

1,829

121

 

J. Upon formation of the joint venture referred to above, the loan of EUR2.4 million was converted into capital contributions, and accordingly form part of the group’s investment as a general partner of ITL.

Adjusted EBITDA for the year totalled EUR125.5 million (2010: EUR103.1 million), an increase of 22% over the same period in 2010. Acquisition of S-Tech Limited

 

Audited full year results for the 12 months ended 31 December 2011

Provisions, which are liabilities of uncertain timing or amount, are recognised when the Group has a present obligation as a result of past events, if it is probable that an outflow of funds will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.

 

 

 

 

IFRS 13 Fair Value Measurement;

 

31 December

31 December

2011

2010

EUR000

EUR000

Funds attributed to jackpots

20,491

12,847

Poker security deposits

15,562

1,447

Other

272

438

36,325

14,732

 

 

 

* Gross income is defined as total revenue plus the Group’s income from associate

 

 

An initial consideration, including working capital adjustments, of EUR8.2 million was paid in cash and additional contingent consideration of EUR8.7 million is payable in the first quarter of 2014 based on the net profit before tax in 2013. These are set out below. Fair value measurement hierarchy

 

 

§ Playtech 2005 Share Option Plan (“the Plan”) and Israeli plans, options granted under the plans vest on the first day on which they become exercisable which is typically between one to four years after grant date. The Group purchased the IP Technology, customers list, brand, plant and equipment, other assets and 100% of the shares of Virtue Fusion Limited subsidiaries: Virtue Fusion CM Limited, Virtue Fusion (Alderney) Limited and Virtue Fusion NV (hereinafter VF business).

Management have not disclosed Ash Gaming’s contribution to the Group profit since the acquisition date nor have they disclosed the impact the acquisition would have and on the Group’s revenue and profits if it had occurred on 1 January 2011, because the amounts are not material.

 

Details of the provisional fair value of identifiable assets and liabilities acquired from subsidiaries, purchase consideration and goodwill are as follows:

The following new standards, interpretations and amendments, applied for the first time from 1 January 2011, have had an effect on the financial information:

Book value and provisional fair value on acquisition

EUR000

Property, plant and equipment

1,910

Intangible assets

132,758

Non-current accounts receivables

1,610

Trade receivables

969

Other receivables

3,319

Cash and cash equivalents

687

Trade payables

(21,266)

Non-current accounts payables

(124)

Net identified assets

119,863

Provisional goodwill

93,374

Fair value of consideration

213,237

 

The key assumptions used by management to determine the value in use of the IP Technology and customer relationships within Mobenga business are as follows:

 

 

Disclosures – Offsetting Financial Assets and Liabilities (Amendments to IFRS 7);

 

 

 

For the VF CGU with carrying value of EUR33.3 million (2010: EUR36.6 million): Discount rate of 15.5% which is based on the Group’s WACC to reflect management’s assessment of specific risks related to the goodwill. Upon exercise of the Option, the Group has the right to receive a portion of the proceeds in WH shares, not exceeding 10% of WH’s outstanding share capital at the time of issue.

 NOTE 23 – DEFERRED TAX LIABILITY

 

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors’ interests in the associate. This ability to offer a turnkey solution has enabled Playtech to extend its relationships with existing online gaming operators as well as new entrants to the online gaming industry and to form joint ventures with well-recognised local operators as their markets adopt regulation. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable.

Exclusive Joint Ventures focused on the B2G online gaming market on a global basis, called Sciplay International Sarl and Sciplay (Luxembourg) Sarl (hereinafter “Sciplay”) will utilise Playtech’s technology capabilities together with Scientific Games’ global infrastructure and experience. Playtech has therefore continued to invest significant human resources to maintain its position as the world’s leading supplier of software and services to the online gaming industry. Share issue costs of EUR1.9 million have been deducted from the gross proceeds.

 

 

Joint Venture with Merkur Interactive GmbH

(*) The Group has no authorised share capital but is authorized under its memorandum and article of association to issue up to 1,000,000,000 shares of no par value.

 

Financial income comprises interest received in the year of EUR0.5 million (2010: EUR0.5 million) generated from cash held in short term deposits, together with EUR3.1 million received as dividend from the investment in Asian Logic Limited (2010: EUR1.1 million). The majority of profits arise in the British Virgin Islands. The Group’s subsidiaries are located in different jurisdictions and are operating on a cost plus basis. Ash has one of the highest penetrations of games in the UK market and was well known to Playtech as a major developer for Playtech’s GTS open platform licensees. The fair value of the options that were granted in respect of equity settled schemes for 2011 is EUR4.1m (2010 – EUR5.9m). As at 3 July 2009, AsianLogic shares were delisted from AIM. No further contingent consideration is payable in respect of this acquisition.

The key assumptions used by management to determine the value in use of the IP Technology and customer relationships within the IGS business are as follows:

 

Loans and bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Long term liabilities

B. As new licensees come on stream and expand their operations there is scope for additional revenue growth in the coming months, and especially when more European markets move to regulated format. The movement in contingent consideration since acquisition, which relates solely to the time value of money, is included in note 6 to the financial information.

 

 

B. The amount included above represents the fair value of contingent consideration as at the acquisition date. We also indicated our intention to pay a combined interim and final dividend for the 2011 financial year. They are classified between current and non-current assets in accordance with the contractual repayment terms of each loan agreement.

Additional Paid in Capital

 

Available for sale reserve

 

Retained earnings

 

Total attributable to equity holders of parent

Non-controlling interest

Total equity

 

 EUR000

 EUR000

 EUR000

EUR000

EUR000

 EUR000

For the year ended 31 December 2010

Balance at 1 January 2010

183,563

1,025

85,328

269,916

-

269,916

Changes in equity for the year

Total comprehensive income for the year

-

(1,025)

64,670

63,645

-

63,645

Dividend paid

-

-

(45,593)

(45,593)

-

(45,593)

Exercise of options

6,127

-

-

6,127

-

6,127

Employee stock option scheme

-

-

5,855

5,855

-

5,855

Balance at 31 December 2010

 189,690

-

110,260

299,950

-

299,950

For the year ended 31 December 2011

Balance at 1 January 2011

 189,690

-

110,260

299,950

-

299,950

Changes in equity for the year

Total comprehensive income for the year

-

1,995

77,696

79,691

10

79,701

Dividend paid

-

-

(23,377)

(23,377)

-

(23,377)

Issue of share capital (net of issue costs)

117,549

-

-

117,549

-

117,549

Exercise of options

614

-

-

614

-

614

Acquisition of non-controlling interest

-

-

-

-

(59)

(59)

Purchase of treasury shares

-

-

(366)

(366)

-

(366)

Employee stock option scheme

-

-

4,678

4,678

-

4,678

Balance at 31 December 2011

307,853

1,995

168,891

478,739

(49)

478,690

 

 

For business combinations completed prior to 1 January 2011, cost comprised the fair value of assets given, and liabilities assumed, plus any direct costs of acquisition. This was hugely successful with substantial increases in retention rates, allowing licensees to market their own bespoke systems relevant to their individual player databases. Annual growth rate, 40% for 2013, 28% for 2014 and 14% for 2015, 5% for 2016 and 2% for the following years, based on the average forecast GDP growth for the UK.

The consolidated financial information incorporate the results of business combinations using the purchase method. The agreement provides for the joint development of an online gaming operation focused on new opportunities as the German online markets regulate, together with a related software licensing agreement.

 

 

Details of the provisional fair value of identifiable assets and liabilities acquired from subsidiaries, purchase consideration and goodwill are as follows:

 

 

 

 

 

 

 

A live video webcast and slide presentation of the analysts’ meeting will commence at 9.30 am, which may be accessed through the following link: http://playtech.production.investis.com/ 

 

 

Total number of shares exercisable as of 31 December 2011 is 6,220,707 (2010 – 5,971,186). Acquisition of GTS Limited

7,399

-

G.

 

On 21 January 2010, the Group formed a strategic partnership with Scientific Games Corporation to jointly develop and market next-generation internet and land-based gaming products and services to regulated gaming operators in the US and other countries.

 

Acquisition of subsidiary, net of cash acquired

 

Changes in accounting policies

 

T. Where the carrying value of an asset exceeds its recoverable amount (i.e. The fair value of share options is estimated by using the Black-Scholes and Binomial models, on the date of grant based on certain assumptions. Tribeca was an asset purchase in 2007 and management are now of the opinion that the underlying cash flows associated with this previous CGU can no longer be separately identified, and are now consumed within the group’s poker product.

 

Amortisation comprises amortisation on acquisitions (not including WH Online) of EUR15.8 million (2010: EUR7.5 million) which is comprised of amounts relating to Tribeca (EUR3.2 million), Virtue Fusion (EUR3.3 million), GTS (EUR1.4 million), PTTS (EUR7.7 million) and other acquisitions (EUR0.2 million). Acquisition of Ash Gaming Limited

 

Regulated markets

The PTTS Group provides marketing and ancillary services to operators of online gaming businesses.

 

 

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.

A 1% change in deposit interest rates would impact on the profit before tax by EUR50 thousands.

 

§ Adjusted EBITDA** increased by 22% to EUR125.5 million (2010: EUR103.1 million)

 

For the GTS CGU with carrying value of EUR18.0 million (2010: EUR20.4 million): Discount rate of 15.5% which is based on the Group’s WACC to reflect management’s assessment of specific risks related to the goodwill. Distribution of Dividend

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

U. In addition, Ash Gaming has brought an experienced and well respected senior team who will further strengthen Playtech’s content capabilities and depth of management. The potential additional capacity in Kiev is substantial, and beyond that which is available elsewhere on such a cost-efficient basis. This represents a payment for the year of EUR47.7 million (2010: EUR46.1 million) representing an increase over last year’s payment notwithstanding the amendment to the dividend payout policy.

Trade receivables which principally represent amounts due from licensees are carried at original invoice value less an estimate made for bad and doubtful debts based on a review of all outstanding amounts at the year-end. Acquisition of PT Turnkey Services Limited

The total consideration of EUR27.4 million (£23 million) was paid in cash, of which EUR8.9 million (£7.5 million) was paid into an Escrow account to be held and released to the venders over the next three years, depending upon the successful completion of certain conditions and indemnities. Of this, total revenues increased 46% to EUR207.5 million (2010: EUR142.3 million) and EUR36.1 million (2010: EUR30.8 million) was generated by the share of profit from WH Online, up 17% on the prior year. Investment in International Terminal Leasing

 

Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) (effective for annual periods beginning on or after 1 July 2012);

 

 For the year ended

 For the year ended

 31 December 2011

 31 December 2010

 EUR000

 EUR000

 ADJUSTMENT TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES

 Income and expenses not affecting operating cash flows:

Depreciation

5,364

3,416

Amortisation

23,773

13,674

Income from associate

(36,073)

(30,792)

Amortisation of intangibles in associate

5,729

8,266

Share of net loss in joint ventures

547

152

Decline in fair value of available for sale investment

551

2,223

Employee stock option plan expenses

4,678

5,855

Income tax expense

957

2,343

Others

105

16

 Changes in operating assets and liabilities:

Increase in trade receivables

(4,250)

(2,791)

Increase in other receivables

(5,461)

(176)

(Decrease)/Increase in trade payables

(17,359)

1,933

Increase in progressive and other operators’ jackpot

7,644

3,483

Increase in other payables

14,201

4,395

Decrease in deferred revenues

(1,931)

(3,073)

(1,525)

8,924

 

 

 

 

 

 

 

b) New standards, interpretations and amendments not yet effective

 

The Group determines the fair value of available for sale investments that are not quoted using valuation techniques.

As of the approval date of the financial information by the board the Group had not completed the valuation of the fair value of the intangible assets and liabilities acquired, and accordingly these disclosures are not provided in the financial statement.

 

 

 

The Company’s MA activities have focused on adding capabilities that broaden Playtech’s offering and extend its technology capabilities and speed of time to market. Overall PTTS represented 39% of the total revenue-driven costs for the year. Accordingly, transactions and balances have been converted as follows:

 

Strategic positioning

An initial consideration of EUR8.0 million was paid in cash and additional contingent consideration is payable in the first quarter of 2014 based on the net profit before tax of the standalone business in 2013. Changes in the estimated value of contingent consideration arising on business combinations completed by this date were treated as an adjustment to cost and, in consequent, resulted in a change in the carrying value of goodwill.

 

Available for sale investments totalling EUR12.4 million (2010: EUR10.9 million) comprise investments in Sportech plc and AsianLogic.

§ Total revenues up by 46% to EUR207.5 million (2010: EUR142.3 million)

 

In May 2011, the Group distributed EUR23,377,446 as a final dividend for 2010. For combinations completed on or after 1 January 2010, direct costs of acquisition are recognised immediately as an expense in the consolidated statement of comprehensive income, within administrative costs.

 

§ different group entities which intend either to settle current tax assets and liabilities 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 assets or liabilities are expected to be settled or recovered.

 

 

WH has entered into a contract with the Group for a minimum term of five years from 31 December 2008 for the provision of online gaming software for poker and casino. 

2011

2010

EUR000

EUR000

Operating profit

52,154

45,309

Amortisation (not including amortisation on investment in WH Online)

23,773

13,674

Depreciation

5,364

3,416

EBITDA

81,291

62,399

Share of profit of WH Online

36,073

30,792

Employee stock option expenses

4,678

5,855

Decline in fair value of available for sale investments

551

2,223

One-off legal costs relating to the litigation with William Hill

1,389

-

Professional expenses on acquisitions

1,488

1,802

Adjusted EBITDA

125,470

103,071

Adjusted EBITDA margin

52%

60%

Adjusted EBITDA margin reduced from 60% in 2010 to 52% in 2011 as was fully anticipated, and due principally to multiple acquisitions over the past two years of lower margin businesses.

 

 

D.

 

EUR000

Cash consideration

2,914

Non-current contingent consideration

748

Current contingent consideration

894

Total cash consideration

        4,556

Finance cost arising on discounting of contingent consideration

        (83)

Fair value of consideration

4,473

Cash purchased

         (79)

Net cash payable (of which EUR2.9m was paid in the year)

4,394

 

 

 

 

These financial information have been prepared in accordance with International Financial Reporting Standards, International Accounting standards and interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union (“adopted IFRSs”). In addition each of the parties contributed EUR100,000 share premium to Sciplay International Sarl and $150,000 to Sciplay (Luxembourg) Sarl by contribution in kind of intangible assets. The Group does not hold any financial assets at fair value through profit and loss.

 

Playtech and its subsidiaries (‘the Group’) develop unified software platforms for the online and land based gambling industry, targeting online and land based operators. Management believes that these figures, excluding such one-off items and non-cash items, best represent the underlying results of the Group.

 NOTE 27 – RELATED PARTIES AND SHAREHOLDERS

§ The discount rate assumed is equivalent to the WACC for the IP Technology and the customer relationships.

In March a flexible loyalty system for Bingo licensees was launched, allowing each site to set up a completely bespoke loyalty programme for their players, including differing loyalty levels, accrual and redemption rates for each level and bonus category. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated balance sheet. In the consolidated balance sheet, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less. Business combinations

 

31 

December

31 

December

2011

2010

EUR000

EUR000

Change in fair value of available for sale investments during the year, net

A. Accordingly the comparative information has been adjusted to reflect this separate product.

 

On 1 July 2011 the Group acquired 100% of the issued share capital of PT Turnkey Services Limited (‘PTTS’) from Worldwide Online Enterprises Limited, a company which owns various assets of associated businesses, including certain companies related by virtue of a significant common shareholder.

Balance Sheet

A. The benefit of networked jackpots was also recently reinforced when a Betfred.com player won £5.1 million in February 2012 on Playtech’s Beach Life slot game. On sale, the amount held in the available for sale reserve associated with that asset is removed from equity and recognised in the consolidated statement of comprehensive income.

In the year ended 31 December 2011, the Group generated EUR74.4 million from its operating activities (2010: EUR71.0 million). These licensees are set to deliver high quality regulated market income in the future.

 

 

           

2011

2010

EUR000

EUR000

Adjusted operating expenses

118,086

70,015

Revenue-driven cost

25,091

12,574

Adjusted operating expenses excluding revenue driven costs

92,995

57,441

Employee related costs

64,309

69.2%

39,594

68.9%

Administration and office costs

11,872

12.7%

8,852

15.5%

Travel, exhibition and marketing costs

4,730

5.1%

4,608

8.0%

Cost of service

4,266

4.6%

831

1.4%

Other operational costs

7,818

8.4%

3,556

6.2%

 

 

Intangible assets identified under the investment in equity accounted associates

 

Towards the end of 2011 Playtech secured an agreement with Paddy Power to move its casino product on to the Playtech platform.  These opportunities were seized, with attractive terms being offered to some high performing affiliates, and PTTS saw a resulting increase in its revenues later in the year, albeit with some increased related costs. Acquisition of PT Turnkey Services Limited

25b

44,314

-

C. A major focus within the team was on the migration of the Italian bingo network on to an upgraded platform, which was completed successfully together with work in advance of regulations in the Spanish market. Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. During 2011, EUR1.0m (2010 – EUR3.8m) has been recognised as an expense in the consolidated statement of comprehensive income.

31 

December

31 

December

2011

2010

EUR000

EUR000

Deferred revenues – current:

Foundation Group Limited

1,943

1,943

AsianLogic

1,262

1,334

Others

1,781

367

4,986

3,644

 

31 December

31 December

2011

2010

EUR000

EUR000

Cash at bank

111,492

29,550

Deposits

53,340

38,969

164,832

68,519

 

During the year, the group has recognised a non-controlling interest of EUR10,000 (2010 – EURnil) owing to ESL, the 15% shareholder.

The Group’s main financial assets are cash and cash equivalents as well as trade and other receivables and represent the Group’s maximum exposure to credit risk in connection with its financial assets. They are carried at fair value with changes in fair value generally recognised in other comprehensive income and accumulated in the available for sale reserve. Dividend distribution

 

 

Casino

 

 

 NOTE 3 – CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and assumptions

 

On 28 September 2010 each of the parties paid additional paid in capital of EUR477,000 (EUR227,000 to Sciplay International Sarl and EUR250,000 to Sciplay (Luxembourg) Sarl).

 

 

C. Playtech produced over 50 new games across download and browser-based formats in 2011, including a cashback slot game, the 50 Line Series featuring Marvel characters, soft-slots and a Halloween-themed game. The fair value of unquoted investments is based on the most recently available market price, less any provision for impairment.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered)

 

Non-derivative financial assets classified as available-for-sale comprise the Group’s strategic investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. The Company is delighted with the fit with the teams coming from our new acquisitions, each of whom are steeped in the same B2B philosophy and desire for being at the leading edge of technology.

Available for sale financial assets

 

The poker development team continued to work on a range of upgrades and enhanced features, including an improved lobby which enables full player personalisation and improved information provision. 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.

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. Finance cost

Finance cost – movement in deferred and contingent consideration

(6,075)

(736)

Exchange differences – on deferred consideration

-

(1,200)

Bank charges

(1,186)

(424)

(7,261)

(2,360)

Net financing expense

(3,289)

(670)

 

IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2015);

 

 

 

 

Acquisition of business and assets of PT Turnkey Services Limited

 

Playtech has experienced a strong start to the year enjoying healthy momentum across its operations including those it has acquired recently. In particular, online gambling is moving towards locally regulated markets and the convergence of online and land-based channels.

 

 For the year ended

 For the year ended

 31 December 2011

EUR000

 31 December 2010

EUR000

Directors compensation

Short term benefits of directors

1,603

1,471

Share based benefits of directors

748

898

Bonuses to executive directors

438

528

2,789

2,897

Auditor’s remuneration

Audit services

Parent company and Group audit

204

144

Audit of overseas subsidiaries

138

125

Total audit

342

269

Non-audit services

Other acquisition and assurance services

379

355

Taxation compliance

86

46

807

670

Development costs (including capitalised development cost)

22,844

16,972

 

The volatility assumption, measured at the standard deviation of expected share price return, is based on a statistical analysis of daily share price over a period starting from the initial date of flotation through to the grant date.

Playtech’s continuing focus on providing the best products, software and services to its customers has again ensured that its licensees have access to some of the most sophisticated tools and exciting content available in the gaming industry.

The Group is tax registered, managed and controlled from the Isle of Man, where the corporate tax rate is set at zero. Strategic alliances or partnerships with other B2B providers have brought greater global reach and extended the Group’s capabilities in market segments where a local presence or track record is critical. Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

 Adjusted EBITDA

The overall term of the ESOP is five to ten years. GTS also signed four new games developers on to the platform who will bring a range of exciting new content, extending the variety of choices for Playtech’s licensees. – the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Changes to estimates can result in significant variations in the amounts charged to the consolidated statement of comprehensive income in specific periods. The take up of the placing and the response from shareholders at the EGM reflected their understanding of the rationale for this course of action.

Subsequent expenditure on capitalised intangible assets is capitalised d only where it clearly increases the economic benefits to be derived from the asset to which it relates. Acquisition of Intelligent Gaming Solutions Limited

25a

2,836

-

B. The carrying amount of investment in associate is subject to impairment in the same way as goodwill arising on a business combination described above.

Book value prior to acquisition

 Adjustments

 Fair value on acquisition

EUR000

 EUR000

EUR000

Property, plant and equipment

27

-

27

Intangible assets

-

973

973

Trade receivables

110

-

110

Cash and cash equivalents

79

-

79

Deferred tax liability

-

(273)

(273)

Trade payables

(134)

-

(134)

Net identified assets

82

700

782

Goodwill

3,691

Fair value of consideration

4,473

 

 

 

c) Currency risk

 

 

 

 

 

 For the year ended

 For the year ended

 31 December 2011

EUR000

 31 December 2010

EUR000

A.

 

31 December,

2011

2010

EUR000

EUR000

Current bank borrowings

13,787

-

Non-current bank borrowings

13,746

-

27,533

-

 

The rate at which the liabilities are payable is 2.25% above Euro LIBOR.

 

 

 

 

 

Management believes that the useful life of the domain names is indefinite. Excluding the impact of acquisitions made in 2011 and the withdrawal from the French market in mid-2010, gross income grew 21%.

Cost of service is mainly costs related to hosting services provided to licensees and grew due to the acquisitions undertaken in the year.

 

In June the Company announced a software agreement with COPA, the largest association of California’s tribes and commercial card rooms, alongside a services agreement in conjunction with Sciplay. A further £4 million in cash will be payable subject to certain agreed deliverables to be provided by Geneity.

E.

Financial Income and Tax

§ Casino

The book value and fair value of intangibles on acquisition include the following:

 People

 

EUR000

Investment in equity accounted associates at 1 January 2010

170,366

Income from associate

30,792

Amortisation of intangibles in associate

(8,266)

Dividend

(30,647)

Investment in equity accounted associates at 31 December 2010

162,245

Income from associate

36,073

Amortisation of intangibles in associate

(5,729)

Dividend

(35,971)

Investment in equity accounted associates at 31 December 2011

156,618

 

 

31 December,

2011

2010

EUR000

EUR000

Long term trade payables

756

767

Severance pay

667

186

1,423

953

 

 

 

§ investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.


NOTE 19 – SHAREHOLDERS’ EQUITY

 

 

B.

Treasury shares

 

 

Included in available for sale investments is EUR10.3m and EUR2.0m measured at fair value using level 1 and level 2 respectively. The deferred consideration for the acquisition of the Purchased Assets was payable in US dollars. The share placement undertaken at the end of the year had no material impact on the EPS for the year as it was completed on 21 December 2011. In the prior year this was disclosed within ‘other’. This will include being positioned more broadly within Playtech’s mainstream casino product; through poker and bingo side games; on Videobet’s land based platform; and on both mobile and social platforms. Amortisation of intangible assets is included in distribution costs. Acquisition of S-Tech Limited

25e

(339)

-

F. In instances where the criteria are not met, a contingent liability may be disclosed in the notes to the financial information. If such conditions are not satisfied, some of the funds held in Escrow may be repaid back to the Group. These steps, when combined with the enhancements that the Videobet platform provides, will help operators to achieve higher machine revenues. A provision will be made where there is a present obligation from a past event, a transfer of economic benefits is probable and the amount of costs of the transfer can be estimated reliably. – the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows). The consolidated financial information present the results of the Company and its subsidiaries (“the Group”) as if they formed a single entity. Under the terms of the agreement Playtech will provide Gala Coral with its IMS platform and a full range of gaming products.

Management have not disclosed Mobenga’s contribution to the Group profit since the acquisition date nor have they disclosed the impact the acquisition would have and on the Group’s revenue and profits if it had occurred on 1 January 2011, because the amounts are not material.

Geographical analysis of non-current assets

 

§ the initial recognition of goodwill;

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the consolidated statement of comprehensive income.

During the year the group advanced loans to affiliates and customers for a total amount of EUR5.0m (2010 – EUR2.0m). The Group’s capabilities are flexible and can be optimised to cater for the needs of a diverse operator base and the market dynamics which operators face. A considerable number of new branded games are planned for 2012.

 

 

 

 

Additional contributions of EUR5.2 million for the purchase of gaming machines were made in the year.

 

 

 

In addition, the summer launch of cash tables in Italy helped to maintain momentum in what remains the most attractive of new regulated markets. The fair value hierarchy has the following levels:

 

Since the acquisition date, VF contributed EUR18.0 million and EUR5.5 million to group revenues and profits respectively in the year ended 31 December 2010. It has continued to invest in the product development needed to maintain its market-leading position, and to provide first class customer service. The Group holds cash balances which include monies held on behalf of operators in respect of operators’ jackpot games and poker operation in the amount of EUR36.3 million (2010: EUR14.7 million). Gala Coral will use Playtech’s systems to manage all of its online activities. Other non-financial assets are subject to annual impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. This includes Buongiorno’s mobile launch in the second quarter, who are now one of the five largest online casino groups in Italy. The Group’s financial instruments are its cash, available-for-sale financial assets, trade receivables, loan receivables, accounts payable and accrued expenses.

Reserve

Description and purpose

Additional paid in capital

Share premium (i.e. Associates are initially recognised in the consolidated balance sheet at their fair value. The investor’s share in the associate’s profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

 

 

 

L.

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. In accordance with IAS36, the Group will regularly monitor the carrying value of its interest in the Ash Gaming business.

 

 NOTE 30 -POST BALANCE SHEET EVENTS

a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

 

 

D. Exchange gains and losses from the aforementioned conversion are recognised in the consolidated statement of comprehensive income.

Expenditure incurred on development activities including the Group’s software development is capitalised only where the expenditure will lead to new or substantially improved products, the products are technically and commercially feasible and the Group has sufficient resources to complete development. Investment in Foundation Group Limited

-

-

B. As a result, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. Non-controlling interests

 

 

The fair value of contingent consideration is based on the probability of expected cash flow outcomes and the assessment of present values using appropriate discount rates. More details including carrying values are included in note 11.

 

 NOTE 25 – ACQUISITIONS DURING THE YEAR

NOTE 1 – GENERAL

 

 

 

 

WH has an option to acquire the Group’s interest in WH Online on an independent fair value basis, exercisable after four or six years from 31 December 2008 (the Option). Excluding the acquisitions in 2011, the contribution of the top 15 licensees has continued to decrease to 72% (2010: 74%) and the number of licensees generating over EUR1.0 million of revenues has grown to 30 from 29 in the prior year. Emphasis Services Limited (“ESL”) holds a non-controlling interest in S-Tech Limited which became a subsidiary of the Group during the year.

Management believes that Domain names are stated at fair value and have an indefinite life due to their nature. In 2011 Playtech was very active and continued to be the key consolidator in the B2B segment, increasing its market position and technology capabilities with three technology acquisitions in the year and one shortly thereafter, in addition to the PTTS acquisition discussed earlier.

 

NOTE 24 – OTHER PAYABLES

When excluding both the negative impact of the withdrawal from the French offshore market, and the impact of the acquisitions in 2011, gross income grew 21%.

Related party receivables included in note 17 of EUR2.9m (2010 – EUR2.4m) are not past due.

 

§ The discount rate assumed is equivalent to the WACC for the customer relationships and affiliates program.

 

The initial cash consideration for the acquisition of PTTS is EUR140.0 million, subject to a working capital adjustment (the “Initial Consideration”) which is to be paid in regular instalments over the next two years. Bad debts are written off when identified.

The investment in WH Online has been accounted for using the equity method in the consolidated financial information and has been recognised initially at cost being the Group’s 29% share of the fair value of the total net assets of the associate together with the goodwill on acquisition. Foundation Group Limited

-

231

B. Share-based payments

 

 

 

Final dividends are recorded in the Group’s financial information in the period in which they are approved by the Group’s shareholders. Gala Bingo’s migration on to the Virtue Fusion network will mean that it now serves most of the UK market’s well established operators.

A. We have stuck to a consistent acquisition strategy and delivered on it through the acquisitions of IGS, Mobenga, Ash Gaming and Geneity. To that end Playtech has devoted considerable time to determining how and where to establish a new development location capable of offering high quality software programmers with the potential for flexible capacity and utilisation. trade receivables), but also incorporate other types of contractual monetary asset.

 

G. The accrual for the jackpot at the consolidated balance sheet date is included in progressive jackpot and other operator’s jackpot liabilities.

 

 

 

Reported net profit for the year increased by 20% to EUR77.7 million (2010: EUR64.7 million) and includes certain cash and non-cash costs relating to current and historic acquisitions, and fair value adjustments to investments. The impact of the US Department of Justice’s actions in April against certain US-facing poker sites has had a profound impact on the market environment.

For the year ended

31 December

2011

2010

EUR000

EUR000

Fair Value

Carrying

amount

Fair Value

Carrying

amount

Cash and cash equivalent

164,832

164,832

68,519

68,519

Available for sale investments

12,376

12,376

10,932

10,932

Other assets

44,055

44,055

28,819

28,819

Deferred consideration

75,343

75,343

15,001

15,001

Contingent consideration

111,914

111,914

16,533

16,533

Loan and Borrowings

27,533

27,533

-

-

Other liabilities

56,500

56,500

34,067

34,067

 

Acquisition of Mobenga AB

 

I. Intangible assets also include internally generated capitalised software development costs. Income taxes

 

 

           

 

 

§ Highly successful launch of Italian cash poker and casino products; preparation for Spanish regulated market well advanced

§ The income approach, in particular, the relief of royalty approach was applied for the valuation, considering projected revenues derived from the business.

 

 

 

A provision for doubtful debtors is included within trade receivables that can be reconciled as follows:

C. It has developed its product and service offering to encompass all aspects of online gaming, including a full suite of products, cutting edge management systems, integration with land-based operations and the marketing and other operational skills that enable operators to get the most out of their online businesses.”

C. There are then significant follow-on opportunities to cross-sell other products to these players – and this is where Playtech has traditionally excelled both in the online arena and in its cross platform capability. The subsidiaries are taxed on their residual profit.

The Group has recorded significant growth across all key financial metrics in 2011 both including and excluding acquisitions. This uniquely has the potential to enable a player to remain within a single application for all their betting and gambling needs, which no other provider can offer.

Adjusted operating expenses for the year increased by 69% to EUR118.1 million (2010: EUR70.0 million). Investment in William Hill Online

156,618

162,245

B.

Playtech believes that mobile gaming is more than just another channel for existing customers. Revenue from these licensees in the current year totalled EUR77.6m (2010 – EUR44.3m).

§ Playtech’s Services business is performing ahead of expectations since the acquisition of PTTS in July, which has also been fundamental in securing two joint venture agreements announced in January 2012

 

§ Other

The contingent consideration is dependent on profits generated by the IGS business in 2011-2013.

b) Credit risk

 

 

During the second half of 2011 the Company decided that a solution in the city of Kiev in the Ukraine offers the best solution for its needs with material benefits for the delivery teams, in line with its strategic plan. Associates

 

31 December,

2011

2010

EUR000

EUR000

Revenue including income from associate

ESL

4,514

7,764

S-tech Ltd

-

51

Sceptre Leisure Plc

-

364

Sportech

167

-

Netplay TV PLC

2,266

1,399

WH Online

58,497

46,398

Share of profit (loss) in joint venture

ITL

72

-

Sciplay

(618)

(152)

Operating expenses

Gamepark Trading Limited

95

211

S-tech Ltd

-

15

Tech Corporation

136

146

800pay Ltd

63

69

ESL

167

288

The following are year-end balances:

31 December,

2011

2010

EUR000

EUR000

Gamepark Trading Limited

-

117

Tech Corporation

43

319

800pay Ltd

32

7

ESL

599

-

Total related party creditors

674

443

Netplay TV PLC

270

306

Sportech

73

-

WH Online

6,897

4,512

Sciplay

39

52

Total related party debtors

7,279

4,870

Sportech PLC (note 14c)

10,322

8,878

Total investment in related party

10,322

8,878

 

It has been a year of very significant change both in the industry and for Playtech itself, with new markets preparing for regulations, and material acquisitions undertaken by the company in the year. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows

Online Gambling Information and Advice

Bella Vegas

Bella Vegas Casino is an online betting site that is owned and operated by the Grand Privé Group. Furthermore, the casino has switched from Microgaming to the much smaller Saucify software, possibly meaning that the casino may be experiencing financial difficulties.

Software: Saucify. The casino group has had a bad reputation among affiliate sites due to the fact that the casino previously withheld due payments after it pulled out of certain geographic regions