Final Results
Playtech Limited
28 February 2007
Playtech Limited
('Playtech' or 'the Company' or 'the Group')
Maiden preliminary results for the year ended 31 December 2006
A strong performance in challenging market conditions
Playtech (AIM: PTEC), the designer, developer and licensor of software for the
gaming industry, is pleased to announce its maiden preliminary results for the
year ended 31 December 2006.
Financial Highlights:
•Total revenues for the year up 89% to $90.1 million (2005: $47.6 million)
•Casino revenues up 81% to $77.2 million (2005: $42.7 million)
•Poker revenues up 309% to $10.9 million (2005: $2.7 million)
•Pro forma revenues for the year, which exclude royalty contributions from
the US, increased 143% to $55.6 million (2005: $22.8 million):
•Casino revenues up 131% to $47.3 million (2005: $20.5 million)
•Poker revenues up 386% to $7.4 million (2005: $1.5 million)
•Adjusted net profit* after tax up 90% to $67.7 million (2005: $35.7
million)
•Adjusted basic EPS* up 78% to 32 cents per share (2005: 18 cents per
share)
•Recommended Final Dividend of 7.0 cents per share giving a total of
approximately 15.7 cents per share for 2006
•Strong trading for January 2007:
•Total royalties up 10% to $5.9 million (December 2006: $5.4 million)
•Casino royalties up 9% to $4.8 million (December 2006: $4.4 million)
•Poker royalties up 15% to $1.0 million (December 2006: $0.9 million)
*In 2006 - excluding one time founders' cash contribution and employee stock
option expenses of $7.3 million.
Operational Highlights:
•Acquisition of certain non-US assets of Tribeca Tables Europe Limited in
November 2006- migration on track
•Fast expansion of development capabilities to support strong product
pipeline and future growth of the Group:
•Expansion of Estonian centre
•Establishment of development centre in Bulgaria
•Investment in the India and Philippines centres acquired from Tribeca
•Substantial expansion into Asia - major software licensing agreement
signed with China's largest corporate retail gaming network, Sino Strategic
International, coupled with new products for the Asian market
•Expansion into land based gaming progressing well - licensing agreement
signed with leading Mexican casino operator Entretenimiento De Mexico S.A.
De C.V.
Avigur Zmora, Chief Executive of Playtech, said:
'We look forward into 2007 with great enthusiasm and expect it to be a year of
further growth. Geographical expansion will be completed and supported by the
development and improvement of our product portfolio, resulting in an increase
in the number of revenue streams available to the Group. Our continuing
commitment to our employees, who are the driving force behind Playtech's
success, will help increase the Group's momentum and to further establish its
position as the world's leading supplier of software to the international gaming
industry.'
- ends -
For further information:
Avigur Zmora, Chief Executive Officer, Playtech Limited
c/o Bell Pottinger Tel: 020 7861 3232
www.playtech.com
David Rydell / Peter Otero / Amy Rajendran
Bell Pottinger Corporate & Financial Tel. 020 7861 3232
Chairman's Statement
As we approach the end of our first year as a publicly traded listed company, it
gives me great pleasure to present the maiden set of preliminary results for
Playtech Limited. The year has been filled with considerable challenges but the
Group has risen to these challenges to prove the robustness and flexibility of
its business model. The figures presented today are a credit to the management
team and all those who work for the Company.
The results were impacted in the fourth quarter by the Group's licensees'
complete withdrawal from the United States. Notwithstanding this action, I am
pleased to announce that Playtech's total revenues for the year were $90.1
million. This represents an increase of 89% on the $47.6 million achieved in
2005. Excluding contributions from the US, revenue for the year totalled $55.6
million, representing an increase of 143% on the $22.8 million in 2005. As a
result of the strong performance, the Board is pleased to recommend a final
dividend of 7.0 cents per share which will give a total dividend for the year of
approximately 15.7 cents per share.
The passing of the US Unlawful Internet Gambling Enforcement Act 2006 was a
watershed moment for the online gaming industry, forcing many gaming operators
to make fundamental changes to their business models. The Group's broad
international portfolio of clients, especially in Asia and Europe, meant that
the impact of the prompt withdrawal by its licensees from the US market was
greatly reduced.
Excellent progress has been made in developing Playtech's strategy of
diversifying its business portfolio - both geographically and by product. The
Company announced two important deals during the year. The acquisition of
certain non-US assets of Tribeca Tables Europe Limited ('Tribeca') pursuant to
the conditional agreement signed in November 2006 is expected to transform the
Group into the world's leading poker network and the landmark five-year software
licensing agreement with Chinese based Sino Strategic International ('SSI') in
December 2006, gives Playtech invaluable access to the huge Chinese gaming
market. Playtech's subsidiary, Videobet, also announced a long-term licensing
contract to supply the Mexican land based gaming market through Mexican casino
operator, Entretenimiento De Mexico S.A. De C.V. ('Emex') in January 2007.
The Group is also increasing the number of platforms through which its software
can be delivered and both mobile phone gaming and Server Based Gaming (SBG)
terminal products were added to its portfolio during the year. In terms of
software product development, Pachinko and Mahjong were added to cater for the
Asian market and a significant number of new gaming products are expected to be
launched during 2007.
Playtech's total commitment to the constant development of new products and
solutions for the dynamic gaming industry is of central importance to today's
leading operators. The quality of Playtech's products and the professional way
in which it conducts its business was further demonstrated by the signing of a
new four year software licensing agreement with PartyGaming plc at the beginning
of this year.
It is the Board's firm view that there remains great potential for growth in the
international gaming market and this sentiment is clearly reflected in
Playtech's continued commitment to expanding its employee base. Playtech has
increased the numbers employed at its main software development and support base
in Estonia, has opened a new development centre in Bulgaria and is developing
the newly acquired Tribeca operations in India and the Philippines. This will
bring the Group's total headcount to just under 450 employees.
In summary, the Board is very pleased with how Playtech has responded to the
challenges and opportunities that it has been presented with over the past year.
The Board looks forward to announcing further progress in newly entered growth
markets and other areas, over the following year. The development of multi
distribution channels will also help the Group access more traditional gaming
sectors, such as land based operators, in addition to offering considerable
cross selling opportunities.
In summary, progress made during 2006 is very encouraging and trading in January
this year is up 10% on December 2006. As a result, the Board looks forward to
the coming year with both eagerness and confidence.
Roger Withers
Chairman
Chief Executive Officer's Statement
I take great pleasure in delivering Playtech's first set of annual results since
the Company floated on the London Stock Exchange Alternative Investment Market
in March 2006. It has been a year of both significant progress and change but
overall I feel that this year has shown Playtech to be both a strong and
adaptable Company with an outstanding business model.
2006 was a critical year for Playtech and the passing of the US Unlawful
Internet Gambling Enforcement Act 2006 materially changed the landscape of the
industry. Whilst it forced many gaming operators to radically change their
business model to survive in the new international environment, it highlighted
the great strength of Playtech as a software provider to the wider gaming
industry and clearly vindicated the Board's strategic decision made over three
years ago to concentrate on geographical diversification. The Board's prompt
reaction to the changing US legal landscape has clearly illustrated Playtech's
ability to react quickly and effectively to changes in our dynamic industry.
Playtech will continue to strengthen its portfolio through a highly active new
product pipeline throughout 2007, coupled with a move into more international
locations.
Review of Operations
During last year Playtech's casino business grew by 81% (131% ex-US) and our
poker business by 309% (386% ex-US). Stripping out US players, in 2006, 34% of
Playtech's player base came from Asia-Pacific and 52% from Europe, representing
year on year growth rates of 102% and 178% respectively.
While the casino and poker streams of business remain our main revenue
generator, Playtech continues to be committed to the development of its product
portfolio. Mobile gaming and Server Based Gaming (SBG) terminals were added to
the Company's delivery platforms whilst Pachinko and initial versions of Mahjong
were added to its games portfolio.
The mobile product that is already running on Playtech's online platforms,
offers players access to Playtech's popular casino platform through their mobile
phones and we expect that this will be a particularly successful cross selling
opportunity for our existing licensees.
Although online gaming has been enjoying extraordinary growth over the past few
years, the more established land-based operators still hold approximately 95% of
total global gaming activity. Playtech is well positioned to penetrate the SBG
market as terminals become of growing importance to land-based operators. While
traditional terminal suppliers will need to make significant investment to adapt
to this new demand, Playtech has applied the technology used in its award
winning online products to the SBG market and is now considered to be one of the
market leaders in this arena.
All Playtech products are designed to allow the best cross selling opportunities
in the market. Cross selling between land-based, online and mobile is easily
done utilising a single account offering and a unified back office system. We
expect it to be the main selling point of Playtech and Videobet products in the
future. Such cross selling capabilities will result in better revenues for both
Playtech and its licensees.
Contract Wins and Strategic Goals
During the final quarter of 2006, Playtech announced two very significant
agreements, the first of which was the acquisition of certain non-US assets of
Tribeca Tables Europe Limited ('Tribeca'), announced in November 2006 and the
second was a landmark five-year software licensing agreement with Chinese based
Sino Strategic International ('SSI') announced in December 2006.
The migration of the Tribeca poker network onto the Playtech platform is
expected to create the world's largest shared liquidity pool in poker gaming and
will, therefore, provide outstanding growth opportunities for the Group and its
licensees. We expect the full completion of this deal, including the full
integration of Tribeca's highly skilled staff based in the Philippines and
India, by the end of March 2007. From this date the acquisition is expected to
be earnings enhancing and is in line with our strategy to be the leading
software provider of all the products that we offer.
The Board is excited by the prospects for the Asian gaming market and is,
therefore, fully committed to the development of its Asian games portfolio.
Playtech's license agreement with SSI will deliver its Peer to Peer (P2P) games
to approximately 600 SSI gaming outlets throughout China. This is a significant
deal for Playtech and provides the Company with an important gateway into a huge
developing market. Coupled with our long-term focus to provide the right
products to the Asian market, this agreement also further diversifies the
Group's geographical reach.
On 2 January 2007, Playtech announced a new long-term software licensing
agreement with PartyGaming plc ('PartyGaming'). Under the terms of the four-year
agreement, Playtech will license its software to several PartyGaming branded
websites on an exclusive basis. The Board sees this as an opportunity and is a
further endorsement of the Playtech product. We believe that Playtech's software
will compliment PartyGaming's existing products whilst providing an additional
route to further revenue enhancement. We look forward to a long and successful
partnership with PartyGaming.
On 23 January 2007, Playtech's wholly owned subsidiary, Videobet entered into a
long-term licensing contract with leading Mexican casino operator,
Entretenimiento De Mexico, S.A. De C.V. ('EMex'). Under the terms of the
three-year contract, EMex will add the Videobet server based gaming product to
its existing and future gaming estates. This deal is the first significant step
for Playtech's land-based offering, and is consistent with the Company's
strategy to leverage its expertise into the lucrative land-based market.
Site Development and Expansion
Playtech is fully committed to the development and delivery of market leading
software products to the international gaming sector. In order to achieve this,
the Company is continually strengthening its development capabilities and as a
result improving delivery time to market. In addition to the development centre
in Estonia, which is the centre for casino, poker and SBG products, Playtech has
opened a new development centre in Bulgaria that will be primarily focused on
the Company's bingo products.
The agreement with Tribeca provides Playtech with an opportunity to develop
Tribeca's centres in India and the Philippines. This will not only offer the
clear geographic advantage of delivery into the fast growing Asian markets but
will also help in the production and development of Asian specific gaming
products that are increasingly being demanded by our licensees. We extend a warm
welcome to our new employees and look forward to working with them to supply the
Asian market with the best and most relevant products.
A review of the successes achieved this year would not be complete without
mentioning the outstanding contribution made by our employees. Playtech's
reputation is built on the quality of its people and while the sector as a whole
was forced to reduce manpower due to changes in the US landscape, Playtech
continued to expand its workforce. This has allowed the Company to maintain the
flexibility for which it has become renowned and to meet with licensee
requirements, product development and client production. We passionately believe
in investing in our people and this commitment will ensure our growth throughout
2007.
On behalf of the Board, I would like to extend my thanks to all our employees
for their tremendous efforts throughout 2006 and look forward to making 2007 an
even better year for Playtech.
Current Trading and Outlook
The 2007 year has started strongly, with January royalties up 10% to $5.9
million on the previous month. Of this, casino royalties are up 9% to $4.8
million and poker royalties are up 15% to $1.0 million.
In the first half of 2007, Playtech is on track to launch a number of P2P games
exclusively for the Asian market, including Cho Dai Di and Do Di Dzho. These
will be added to our existing suite of poker games and will help the Group
further build its presence in Asia.
With Playtech increasing the ways in which it can deliver its gaming software,
through, for example mobile phones and terminals, further growth can be expected
through the cross selling opportunities that this presents.
We have quickly established a market leading position in the SBG market, the
technology of which is based on Playtech's outstanding online gaming software.
All evidence points towards the fact that SBG will play an increasingly
important role in the international gaming market and Playtech is in an ideal
position to take advantage of the growth opportunities that this offers. The
deal with EMex illustrates this well and other similar deals will no doubt
follow this year.
Playtech is also developing its centre in Bulgaria as a dedicated resource for
the development of its exciting Bingo product. Previously, this game did not
represent an important part of Playtech's gaming portfolio but our research
suggests that an improved Bingo product, coupled with the right level of support
will create a revenue stream that is much more meaningful to the Group.
We look forward into 2007 with great enthusiasm and expect it to be a year of
further growth, both geographically and through new product development. Our
continuing commitment to our employees, who are the driving force behind
Playtech's success, will help increase the Group's momentum and further
establish its position as the world's leading supplier of software to the
international gaming industry.
Avigur Zmora
Chief Executive Officer
Financial Review
Playtech is pleased to announce the financial results for the year ended 31
December 2006, our maiden set of preliminary results as a publicly quoted
company. Given the challenges faced by the Group, Playtech has registered an
extremely robust performance. This was despite the results in the final quarter
of the year being affected by the complete and immediate withdrawal from the
United States following the passing of the US Unlawful Internet Gambling
Enforcement Act 2006.
Total revenues for the year were $90.1 million which represented an increase of
89% on the $47.6 million achieved in 2005. Casino revenues for the year totalled
$77.2 million, an increase of 81% from $42.7 million in 2005. Poker revenues for
the year totalled $10.9 million, an increase of 309% from the $2.7 million in
2005.
On a pro forma basis, which excludes contributions from the US, revenues for the
year totalled $55.6 million, representing an increase of 143% on the $22.8
million in 2005. On the same basis, casino revenues for the year totalled $47.3
million, an increase of 131% from the $20.5 million in 2005. Poker revenues for
the year totalled $7.4 million, an increase of 386% from the $1.5 million in
2005.
The last quarter of 2006, which is traditionally a strong quarter, was
materially affected by the complete and immediate withdrawal from the United
States. Total revenue were $17.4 million which represented an increased of 13%
on the $15.3 million in the last quarter of 2005. Casino revenues for Q4 2006
totalled $14.3 million, an increase of 5% from $13.5 million in Q4 2005. Poker
revenues for the year totalled $2.7 million, an increase of 116% from the $1.2
million in Q4 2005.
Excluding contributions from the US, revenue for Q4 2006 totalled $16.3 million,
representing an increase of 110% on the $7.8 million in Q4 2005. On the same
basis, casino revenues for Q4 2006 totalled $13.4 million, an increase of 98%
from the $6.8 million in Q4 2005. Poker revenues for Q4 2006 totalled $2.6
million, an increase of 239% from the $0.8 million in Q4 2005.
Net profit after tax for 2006 was $60.4 million, an increase of 69% over 2005.
Adjusted net profit* after tax, for 2006 was $67.7 million, an increase of 90%
over 2005. The adjusted EPS* for the year, based on weighted average shares
outstanding of 210,168,682, is 32 cents per share compared to the prior year
which was 18 cents per share. Fully diluted EPS* for 2006 was 31 cents per share
compared to 18 cents per share in 2005.
The Group's operating profit margin was influenced by the provision of a
one-time cash contribution from the founders of the Company to Playtech's
employees in the first half of the year, amounting to $6.6 million and employee
stock option expenses amounting to $0.7 million. The provision for this was
accounted for in accordance with generally accepted accounting principles and
did not have any cash impact on the Company. In addition, the operating profit
was influenced by the reduction in revenue contribution from our licensees' US
players in the fourth quarter of 2006. Excluding cash contribution and employee
stock option expenses, the operating profit margin decreased to 72% from 75% in
2005.
*In 2006 - excluding one time founders cash contribution and employee stock
option expenses of $7.3 million.
Cost of Operations
As Playtech's business has grown, the Group has significantly increased its
number of employees, which included further hiring by our Estonian and Israeli
operations and the formation of a new R&D subsidiary in Bulgaria. Furthermore,
we have incurred additional cost associated with becoming a publicly traded
company. As a result, cost of operations during 2006, excluding the founders'
cash contribution and employee stock option expenses, increased by 112% to $25.6
million compared to $12.1 million in 2005.
Given the Board's expectation about the Company's prospects in 2007, the
withdrawal of Playtech's licensees from all their US facing activity had little
or no impact on costs nor did it require any restructuring of the cost base.
Operating activity is mainly conducted in Estonia through two of our
subsidiaries. Operating expenses were $9.1 million, representing an increase of
94% over 2005, although, operating costs remained at the same percentage of
revenue as 2005.
Sales and Marketing expenses were $8.8 million, representing an increase of 62%
on 2005. This was mainly as a result of salary increases attributable to the
recruitment of sales staff, an increase in reseller fees that are paid as a
percentage of revenue and an increase in the number of trade shows attended
during the year.
Development costs increased by 46% on the previous year to $1.5 million. These
costs are associated with investment into the improvement of existing products.
The cost of new products are capitalised and amortised as part of the operating
expenses when they are launched.
General and administrative expenses, before the founders' one time cash
contribution to employees, were $6.3 million, an increase of 568% over 2005.
In line with generally accepted accounting principles, the founders' one time
cash contribution to employees of $6.6 million is included as a one-time expense
under General and Administrative expenses. Due to the fact that this
contribution is fully payable by the founders' trust directly to employees,
there is no cash impact on the Group. Employee stock option expenses in 2006
amounted to $0.7 million.
Financial Income and Taxation
Cash is generally held in short-term US dollar deposits. Such deposits have
generated in 2006 a financial income of $3.6 million.
Only the Bulgarian and Israeli subsidiaries have a taxable income, which is
charged on a cost plus basis. Following an agreement signed with the Israeli Tax
Authorities during 2006, the Israeli subsidiary paid $0.2 million in back taxes.
Dividend
The Board has recommended a final divided of 7.0 cents per share. Once approved
and paid, this will give an aggregate dividend for the 2006 year of
approximately $33.5 million or approximately 15.7 cents per share.
During 2006 the Company paid dividends to the amount of $39.5 million, of which
$21 million was paid prior to the admission onto the Alternative Investment
Market as a final dividend for 2005. $18.5 million was paid as an interim
dividend in October 2006.
Balance Sheet
Cash and cash equivalents as at 31 December 2006 amount to $101.4 million,
representing 87% of the balance sheet (2005: 72%)
The trade receivables balance as at 31 December 2006 represents mainly amounts
due by licensees for the month of December 2006.
Intangible assets mainly consist of patent and intellectual property rights and
development costs of new products such as the Poker platform, mobile platform,
and the Videobet product. The development of Mahjong and other Asian games is
also included under this section.
Cash Flow
The Group generated cash of $72.6 million of cash in 2006 from operating
activities (2005: $35.2 million).
The Group's cash usage in investing activities was $6.5 million (2005: $1.0
million), which was mainly accounted for capitalised development costs
capitalised relating to the Videobet, mobile and Mahjong products and the
acquisition of fixed assets.
The Group's financing activities generated $17.2 million from net IPO proceeds
of $56.2 million, less the dividend payment to shareholders of $39.5 million. In
2005 the usage amounted to $27.5 million that mainly related to the repayment of
shareholders' loans and dividend payment.
Acquisition
In November 2006 Playtech signed an agreement to acquire certain non-US assets
and undertakings of Tribeca Tables Europe Limited ('Tribeca'). The consideration
for this acquisition is calculated according to a formula based on Playtech's
earnings from the acquired assets. For example if the annualised revenue
generated from this acquisition, over the measurement period is $16.0 million,
the consideration to be paid to Tribeca will be approximately $75.0 million. The
final consideration will be adjusted upon Playtech's realised revenues. The
maximum consideration that the Company will be liable to pay is $139.0 million,
which will be paid in the event that the annualised revenue generated from the
acquisition, over the measurement period, exceeds $29 million. The consideration
is not subject to any minimum amount. The Tribeca assets acquisition will be
accounted for in the financial statements of 2007.
Shuki Barak
Chief Financial Officer
CONSOLIDATED INCOME STATEMENT
For the year ended
31 December,
-------------------------
2006 2005
-------------------------
US$000 US$000
-------------------------
(Unaudited) (Audited)
Revenues 90,078 47,596
Operating expenses (9,247) (4,676)
Sales & marketing expenses (8,941) (5,421)
Development costs (1,567) (1,021)
General & administrative expenses (13,101) (936)
------------------------
(32,856) (12,054)
------------------------
-----------------------------------------------------------------------
Operating profit before charges
related to founders' cash contributions to
employees and employee stock option
expenses 64,491 35,564
Charge related to founders' cash
contributions to employees (6,566) -
Employee stock option expense (703) (22)
------------------------
Total benefit charges (7,269) (22)
-----------------------------------------------------------------------
Operating profit 57,222 35,542
Financing income 3,638 295
Financing cost (101) (146)
------------------------
Profit before taxation 60,759 35,691
Tax expenses (345) (22)
------------------------
Profit for the year attributable to
the equity holders of the parent 60,414 35,669
========================
Earnings per share (in Cents)
Basic 29 18
Diluted 28 18
CONSOLIDATED BALANCE SHEET
As of 31 December,
------------------------
2006 2005
------------------------
US$000 US$000
------------------------
(Unaudited) (Audited)
NON-CURRENT ASSETS
Intangible assets 4,355 1,388
Property, plant and equipment 3,015 934
Other non-current assets 127 60
------------------------
7,497 2,382
------------------------
CURRENT ASSETS
Cash and cash equivalents 101,403 17,995
Trade receivables 6,257 4,189
Other accounts receivables 1,280 337
------------------------
108,940 22,521
------------------------
TOTAL ASSETS 116,437 24,903
========================
EQUITY AND LIABILITIES
Share capital - 10
Additional paid in capital 56,370 100
Employee stock option reserve 725 22
Retained earnings 47,731 19,587
------------------------
Equity attributable to equity holders of the
parent 104,826 19,719
------------------------
NON-CURRENT LIABILITIES
Other non-current liabilities 46 82
------------------------
CURRENT LIABILITIES
Trade payables 7,394 2,987
Related parties 1,091 918
Other accounts payables 3,080 1,197
------------------------
11,565 5,102
------------------------
TOTAL EQUITY AND LIABILITIES 116,437 24,903
========================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Employee
Additional stock
Share Paid in options Retained
capital Capital reserve earnings Total
-------------------------------------------------------------
US$000 US$000 US$000 US$000 US$000
-------------------------------------------------------------
(Audited) (Audited) (Audited) (Audited) (Audited)
Balance at 1 January 2005 10 100 - 25,583 25,693
Changes in equity for the
period
Profit for the year - - - 35,669 35,669
-------------------------------------------------------------
Total recognized income and
expense for the period - - - 35,669 35,669
Dividend paid - - - (41,000) (41,000)
Share issue costs - - - (665) (665)
Employee stock option scheme - - 22 - 22
-------------------------------------------------------------
Balance at 1 January 2006 10 100 22 19,587 19,719
=============================================================
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Changes in equity for the
period
Profit for the year - - - 60,414 60,414
--------------------------------------------------------------
Total recognized income and
expense for the period - - - 60,414 60,414
Dividend paid - - - (39,500) (39,500)
Initial Public Offering
proceeds - 59,862 - - 59,862
Share issue costs - (4,335) - 664 (3,671)
Cancellation of issued shares (10) 10 - - -
Founders' cash contribution
to employees - - - 6,566 6,566
Exercise of options - 733 - - 733
Employee stock option scheme - - 703 - 703
--------------------------------------------------------------
Balance at 31 December 2006 - 56,370 725 47,731 104,826
==============================================================
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended
31 December,
----------------------
2006 2005
----------------------
US$000 US$000
----------------------
(Unadited) (Audited)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 60,759 35,696
Tax (345) (22)
Net cash provided by (used in) operating activities
(see below) 12,213 (436)
----------------------
Net cash provided by operating activities 72,627 35,238
----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loss from disposal of investment - (5)
Cash acquired with subsidiary - 51
Long term deposits (135) -
Acquisition of fixed assets (2,747) (696)
Acquisition of intangible assets (1,738) (12)
Capitalized development costs (1,835) (356)
----------------------
Net cash used in investing activities (6,455) (1,018)
----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loan to shareholders - (15,087)
Related parties and shareholders (205) 1,094
Dividends paid (39,500) (12,890)
Initial Public Offering proceeds 59,862 -
Exercise of options 733 -
Share issue costs (3,671) (665)
Others 17 25
----------------------
Net cash provided by (used in) financing activities 17,236 (27,523)
----------------------
INCREASE IN CASH AND CASH EQUIVALENTS 83,408 6,697
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 17,995 11,298
----------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR 101,403 17,995
======================
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Income and expenses not affecting operating cash flows:
-------------------------------------------------------
Depreciation 666 313
Amortization 606 122
Founders' cash contribution to employees 6,566 -
Employee stock option plan expenses 703 22
Others 18 7
Changes in operating assets and liabilities:
--------------------------------------------
Increase in trade receivables (2,068) (2,341)
Decrease in related parties 377 7
Increase in other receivables (943) (173)
Increase in trade payables 4,408 1,287
Increase in other payables 1,880 320
---------------------
12,213 (436)
=====================
NON CASH TRANSACTIONS
In 2005 a loan to shareholders of 27,905 was cleared by a dividend
1. Basis of preparation
The preliminary results do not constitute statutory accounts. The financial
information for the year ended 31 December 2006 is extracted from the Group's
unaudited financial statements to that date. The financial information for the
year ended 31 December 2005 is extracted from the Group's statutory financial
statements to that date, which received an unqualified audit report.
2 . Accounting policies
The preliminary results of Playtech Limited and all its subsidiaries have been
prepared in accordance with International Financial Reporting Standards (IFRSs).
These preliminary results have been prepared on the basis of accounting policies
followed in the preparation of the Group's annual financial statements for the
year ended 31 December 2005.
3. Earnings per share
Earnings per share have been calculated using the weighted average number of
shares in issue during the relevant financial periods. The weighted average
number of equity shares in issue and the earnings, being profit after tax are as
follows:
For the year ended 31 December,
-------------------------------
2006 2005
-------------------------------
In cents In cents
Basic 29 18
Diluted 28 18
US$000 US$000
-------------------------------
Profit for the year 60,414 35,669
===============================
Number Number
Denominator - basic
Weighted average number of equity shares 210,168,682 200,000,000
===============================
Denominator - Diluted
Weighted average number of equity shares 210,168,682 200,000,000
Weighted average number of option shares 7,962,839 510,542
-------------------------------
Weighted average number of shares 218,131,521 200,510,542
===============================
4. Founders cash contribution to employees
In June 2006, following the IPO, the founders of the Company have
allocated $6,566,000, of their own personal funds, into a trust fund to the
benefit of the Company's employees. Earnings per share before founders cash
contribution to employees (in Cents):
For the year For the year
ended ended
---------------------------
31 December 31 December
---------------------------
2006 2005
---------------------------
In cents In cents
---------------------------
Basic - adjusted 32 18
Diluted - adjusted 31 18
US$000 US$000
---------------------------
Profit for the year 60,414 35,669
Charges related to founders cash contribution 6,566 -
---------------------------
Profit for the period before founders cash
contribution to employees 66,980 35,669
===========================
Denominator - basic
Weighted average number of equity shares 210,168,682 200,000,000
---------------------------
Number Number
Denominator - diluted
Weighted average number of equity shares 210,168,682 200,000,000
Weighted average number of option shares 7,962,839 510,542
---------------------------
Weighted average number of shares 218,131,521 200,510,542
===========================
5. Capital commitment
On 13 November 2006, the Company signed a non US asset purchase agreement with
Tribeca Tables Europe Limited ('Tribeca'), a software designer that provides a
poker network solution to a number of the world's most respected online poker
operators. According to the agreement, the entire Tribeca network will cease its
operations in six months from the date of the agreement, by which time the
migration of the online poker operators to Playtech's platform is planned to be
complete. The consideration for the acquisition is calculated according to a
formula based on the future earnings from the acquired assets. The final
consideration will be adjusted upon Playtech's realized revenues. The maximum
consideration that the Company will be liable to pay is $139 million, which will
be paid in the event that the annualised revenue generated from this
acquisition, over the measurement period, exceeds $29 million. The Company will
pay the consideration in cash in four instalments. The first is payable upon
satisfaction of specific conditions. The second, third and fourth payments are
to be made on the 9th, 18th and 24th month intervals, after the date of the
agreement, respectively. As of the date of this report the conditions have not
yet been satisfied and the Company has not accounted for this acquisition in the
year ended 31 December 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
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