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Annual Report and AccountsFor the year ended 31 December 2012Source of SucceSS

Playtech is the world’s largest listed online gaming software and services supplier.

Competitive AdvantagePlaytech has significant scale and offers a full range of gaming products and ancillaryservices, underpinned by a sophisticated technology platform, which unites all product verticals, third party content, an extensive content library and complementary services; these are delivered seamlessly through multiple channels including web, mobile, live and broadcast enabling players to move between product verticals using one wallet, maximising player value and ultimately licensee revenue.

Principal Customers and MarketsPlaytech derives revenue from three main constituencies: B2B, B2G and joint ventures.

Playtech has over 110 licensees comprising a number of the leading names in the gaming industry, including Bet365, Gala Coral, Ladbrokes, Titan, Tropez and William Hill. Playtech has approximately 40 licensees contributing €1 million or more in revenues, with only three licensees representing more than 10% of total revenues. The Group provides its services worldwide in both regulated and unregulated markets and currently has more than half of its software royalty revenues derived from regulated markets.

Playtech is supplier to the government lotteries in Finland and Serbia.

Through 2012, Playtech had joint ventures with the following: William Hill Online (29%), Gauselmann (Germany) (49.99%) and Peermont (South Africa) (50%).

24 January 2012 Formation of two joint ventures

24 January 2012 Acquisition of Geneity

1 March 2012 Signs agreement with Caliente, Mexico’s largest land-based casino operator

9 May 2012 Gala Casino launch

12 Jun 2012 Playtech enters the Social gaming arena through Skywind Holdings

2 July 2012 Listing on LSE Main Market

11 July 2012 Gala Bingo launch

24 August 2012 Launch of mobile bingo

26 August 2012 Poker liquidity program launched

11 October 2012Coral launch

6 November 2012 Betclic Everest Launch with Playtech

A year of progress

Continued overleaf...

Casino Games Poker Bingo Sport

Live & TV Gaming Internet Mobile TV

BroadcastGaming

Machines Lottery

IMS: Integrated Operator Platform

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About PlaytechOur business model is centred on the continual development of market-leading gaming products and content. These, together with a broad range of ancillary services, are provided to a diverse range of operators across both locally regulated markets and globally, through all distribution channels.

Overview Our Products and PlatformPlaytech has industry-leading content and player networks combined with unique cross-platform capabilities. This is supported by the sophisticated and integrating tools of the IMS enabling operators to easily integrate new products on a single platform and maximise the potential for enhanced player returns.

Turnkey ServicesPTTS delivers material value and expertise to its licensees across the key elements of player acquisition and retention, together with the opportunity to realise substantial cost efficiencies through the outsourcing of operational services which benefit from economies of scale.

CasinoWith best-of-breed graphics and audio, together with regular releases of new games content including branded games, Playtech Casino has been designed to attract and retain a broad range of players.

GamesPlaytech’s Games Tab is centred on an innovative open platform solution which enables the seamless integration of a wide range of games from both internal and third-party developers.

PokerHome to Europe’s leading operators, Playtech’s iPoker network is the largest independent poker network in the world, with over 35,000 concurrent players at peak time.

BingoPlaytech’s Bingo network includes over 80 sites and is home to 65,000 daily players, over 16,000 concurrent players at peak time, driving over €165 million in total stakes- per-month.

Sports BettingPlaytech’s Sports Betting platform offers a sophisticated next-generation trading and in-play capability across a very broad sports offering.

Live & TV GamingWith both European and Asian formats, Playtech’s Live offering drives important cross-channel traffic, blurring the boundary between land-based and online environments.

MobileAs an integral part of the cross-platform offering, Playtech Mobile enables content integration and a seamless player experience.

Key Products

Our Presence and MarketsRegulated MarketsPlaytech’s experience in locally-regulated markets, such as the UK, Italy and Finland, is a crucial part of the Company’s successand provides substantial long-term growth opportunities. Membership of the World Lottery Association and close relationships with regulators worldwide reflect Playtech’s strong reputation. This is aided by Playtech’s profile as a publicly listed company.

As the world’s leading listed supplier to the online gaming industry, Playtech offers the widest product choice in the industry, backed by over a decade of outsourcing expertise, including marketing and player retention.

Global OperatorsLeading operators include sportsbook and specialist gaming operators, such as Bet365, Betfair, Betfred, Gala Coral, Ladbrokes, Mansion, Paddy Power and Titan.

Locally-Regulated MarketsWell-recognised local operators in regulated markets, including Casino Gran Madrid, Codere, JOA, Olympic, SISAL, SNAI and Sportech.

B2GState-owned or state-sponsored entities, including the RAY in Finland and Serbian Lottery.

Joint Ventures Partnerships with leading land-based operators including Gauselmann, Peermont and William Hill Online*.

VideobetPlaytech’s gaming machine subsidiary Videobet provides a complete end-to-end solution for land-based gaming operations, leveraging the architecture and stability of Playtech’s online offering.

SocialIn 2012, Playtech entered into a licence agreement with Skywind Holdings to provide the Group with a wide range of social and real money gaming software, giving access to platforms and products and complementary real money products.

* William Hill confirmed on 1 March 2013 that it was exercising its call option over Playtech’s 29 per cent stake in William Hill Online. The transaction is expected to complete by the end of April 2013.

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Playtech Limited Annual Report and Accounts 2012 1

2012 317.5

2011 207.5

2010 142.3

2009 114.8

2008 111.5

* Gross income is defined as total revenue plus the Group’s income from associate.** Adjusted EBITDA, adjusted EPS and adjusted net profit are calculated after adding

back certain non-cash charges, cash expenses relating to certain one-off professional and legal costs, expenditure relating to the move to the Main Market and prior year taxes (see reconciliation in Financial Review on page 24).

*** Net cash is defined as cash and cash equivalents less loans and borrowings.

Highlights

€51.7m 2011: €137.3m

Total Revenue

Adjusted Net Profit**

Adjusted Basic EPS** Recommended Final Dividend for 2012

Net Cash Balances***

Adjusted EBITDA**

€186.7m +49% 2011: €124.9m

€168.5m +49%2011: €112.8m

Total Revenue

€317.5m +53%2011: €207.5m

Gross Income*

€368.1m +51%2011: €243.6m

58.1 € cents +26%2011: 46.2 € cents

15.4 € cents per shareFull year dividend

+41%

1 Highlights2 Chairman’s Statement

Overview

4 Chief Executive Officer’s Report10 Industry Overview 14 Business Model & Strategy 16 Products 21 Partnerships 22 Financial Review

Business Review

50 Corporate Social Responsibilty

Sustainability

28 Board of Directors30 Directors’ Report33 Corporate Governance37 Remuneration Report45 Nominations Committee Report46 Audit Committee Report47 Risk & Compliance Committee Report48 Key Risks

Governance

57 Independent Auditor’s Report 58 Financial Statements63 Notes to the Financial Statements94 Parent Company Financial Statements98 Five-Year Financial SummaryBC Company Information

Accounts

2 Playtech Limited Annual Report and Accounts 2012

Operating across all regulated areas, Playtech is in a prime position to benefit from increasing regulation as it develops on an international scale. It is the Board’s belief that the Company’s ability to provide market-leading products and services to both established operators and new entrants operating under new regulations will over time increase the scale and quality of its earnings.

Strategic developments during the year included further integration of PTTS, our wholly owned services business, the acquisition of which introduced the ability to provide full turnkey solutions, enhancing joint venture opportunities and further increasing Playtech’s ability to attract new partners. The acquisitions of Mobenga, Ash Gaming and Geneity have been fully integrated and have proven to positively enhance Playtech’s offering and strengthen its position as the best of breed technology provider to the global online gaming industry.

The Company was pleased to announce in February 2013 that its joint venture with Gauselmann in Germany was awarded licenses by the State of Schleswig-Holstein for the provision of casino and sports betting, and management is now working with Gauselmann to develop an appropriate business plan pertinent to the emerging regulatory regime in Germany.

Signs from the US are encouraging, with the news that the states of New Jersey and Nevada are to legalise online gaming and poker respectively. As a result, other US states may contemplate similar actions, however, such developments are in their infancy and there remains much work to do to resolve regulatory, political and practical considerations. We continue to watch developments closely.

IntroductionThe year ending 31 December 2012 was an exceptional period in the continued development of Playtech. The Company delivered another impressive financial performance and passed a number of significant corporate and operational milestones. Notably, the Company achieved a Premium Listing on London’s Main Market, reflecting both the short-term effort needed to make the progression and the longer term determination to comply with the responsibilities associated with a Premium Listing. Pleasingly, Playtech was included in the FTSE 250 Index in September and has, since inclusion, moved up approximately 30 places. The move provided greater visibility for the Company, improved market liquidity and affords wider recognition of Playtech’s strengths and consistent strong financial performance.

Strategic DevelopmentsPlaytech is the clear market leader in the provision of software and services to the global online gaming industry. Its offering includes a full product suite, leading-edge management system, full integration across all player interfaces and a broad range of marketing services and techniques that enable licensees to maximise the potential of their online gaming business.

The period saw growth of software revenues derived from regulated markets, including Italy, Spain and Denmark, further enhanced by organic growth. While the regulatory environment remains in a state of flux in a small number of geographies, the global process of regulating the online gaming industry continues to advance. This trend, led by national and local governments, is a key driver of Playtech’s current and future success.

Chairman’s Statement “Playtech has had another excellent year, incorporating some of its most significant achievements to date.”

Overview

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Governance and Risk ManagementPlaytech is committed to upholding the highest levels of corporate governance. The Company was delighted to welcome Andrew Thomas to the Board as an independent Non-Executive Director, and Chairman of the Audit Committee, effective 19 June 2012. Andrew brings with him a wealth of experience in the leisure sector and valuable insight into the nuances of taxation and finance.

As announced at the interim results last year, David Mathewson retired as Chief Financial Officer and from the Board on 31 December 2012. I would like to thank David for his efforts and counsel while he was a director.

Ron Hoffman, formerly Vice President of Finance over the previous eight years, and who has played a fundamental role in all of Playtech’s recent acquisitions, was appointed to the Board as Chief Financial Officer with effect from the new financial year.

The Board has worked to ensure a robust governance structure to comply with corporate best practice. During 2012, an advanced internal audit function was implemented by PwC and the Company, and a revised Code of Conduct and Ethics policy was adopted.

William Hill OnlineIn October, the Board of William Hill plc commenced the valuation process relating to their call option over Playtech’s 29% stake in William Hill Online. The process culminated in the confirmation that William Hill will exercise the option for a consideration of approximately £424 million. The transaction is expected to complete by the end of April 2013.

This has generated substantial returns for the Company during the lifetime of the joint venture. While this brings to a close a highly successful and profitable joint venture for Playtech, the Company will continue to enjoy a close working relationship with William Hill, which remains a top-five licensee.

DividendThe Board has recommended a final dividend of 15.4 € cents per share, giving a total 2012 dividend of 23.2 € cents per share (2011: 16.5 € cents per share), an increase of 41%. This reflects the Company’s strong underlying growth in earnings, cash generation and the Company’s dividend policy of paying out 40% of adjusted net profit.

Subject to shareholder approval of the final dividend at the Annual General Meeting, to be held on 8 May 2013, the dividend will be payable on 24 May 2013 to those shareholders on the Company’s register as at the record date of 26 April 2013. The ex-dividend date is 24 April 2013.

For any shareholders who elect to receive their dividends in sterling the conversion exchange rate from euros into sterling will be set on 26 April 2013 and election forms should be returned to the Company’s registrars by 3 May 2013.

The Board, with its advisers, is undertaking a broad review of the most effective use of the expected proceeds from the disposal of William Hill Online, once completed, taking into consideration feedback from shareholders and the Company’s future requirements. The Board will, amongst other strategic options, assess the potential for further value-enhancing

acquisitions, joint ventures and partnerships, focusing on regulated markets, together with the possibility of a return of capital to shareholders. Playtech has a proven ability of generating value through successful acquisitions and management is confident that this will continue.

In summary, Playtech has had another excellent year, incorporating some of its most significant achievements to date. The Company continues to capitalise on its clear strategy and strong balance sheet. The Board is highly confident of the Company’s prospects in 2013 and beyond.

Roger WithersChairman14 March 2013

Listing on the Main Market

“ This is a very exciting occasion for Playtech and we are delighted to be part of the Official List. We have experienced exceptional growth since the Company was founded in 1999, and this marks a significant milestone in our continued development.”


Regulated MarketsRegulated markets continue to present significant potential for revenue growth and Playtech is in a prime position to take advantage of global market developments, such as those in Italy, Denmark, Spain, the Netherlands, Greece and Germany. Pleasingly, we announced that Playtech’s joint venture with Gauselmann, created in January 2012, was awarded two licenses by the state of Schleswig-Holstein for online casino and sports betting a year later.

While Playtech continued to focus on increasing income from regulated markets, revenue from dot.com operators also increased in 2012. These operators provide liquidity in most regulated markets and are important to the Company’s strategy, as they establish themselves in regulated markets and provide the cornerstone for our activities in regulated and soon to be regulated markets.

In France, Betclic Everest launched with Playtech’s iPoker network on iPoker.fr and iPoker.com in November. This was followed by the launch of Unibet.fr at the beginning of this year. Betfair has also commenced its migration onto the iPoker network, which is due to be completed in July 2013. These developments have cemented Playtech’s leadership in the poker market as the natural network of choice.

During the year, Playtech undertook a significant level of activity in anticipation of Spanish regulation and further liberalisation in Italy. The Company has enjoyed pleasing revenue growth following the launch in June of regulated casino, poker and sports betting in Spain and the launch in December of regulated online slots in Italy.

In the UK, the third and final phase of the Gala Coral programme was completed in the last quarter of the year and Betfair commenced its poker migration to the iPoker network. After the highly successful launch of coral.co.uk, Gala migrated most of its product verticals onto Playtech’s IMS platform. The offering includes some of Playtech’s more recent innovations, including the Playtech portal, a new mobile hub and an improved IMS. The current results from Gala Coral are exceeding expectations, illustrating the cumulative, positive impact derived through the cross-selling opportunities afforded by an integrated offering.

In November, the Dutch government announced plans to sell the state-owned casino monopoly and legalise online gaming to increase competition. The government is expected to introduce a draft framework for consultation in the spring of 2013 with a finalised law expected to be approved by the end of the year. We anticipate that Playtech and its licensees will seek to benefit from these changes in the Dutch market.

OverviewPlaytech again delivered an outstanding financial and operational performance in a year of significant change for the online gaming market. The Company increased revenue by 53% to €317.5 million, gross income by 51% to €368.1 million and adjusted EBITDA grew by 49%.

During the period, Playtech expanded its product offering both organically and through acquisitions, secured 19 new licensees including major operators such as Gala Coral and Betclic Everest, further extended its relationships with existing licensees, and entered into significant new joint venture opportunities.

The Company has the operational capacity to stimulate future growth, specifically in mobile gaming, which enjoyed a triple digit percentage performance increase. In order to maintain its high level of customer service, Playtech invested in new product development related to the mobile hub, IMS and player portal, enabling operators to create a bespoke player experience, and grew its employee base by 63% to support the business and its customers.

Importantly, the Company surpassed a major milestone in achieving a Premium Listing on London’s Main Market in July and was included in the FTSE 250 Index in September.

Chief Executive Officer’s Report “In 2012, Playtech strengthened its position as the clear market leader in the provision of software and services to the global gaming industry.”

Business Review

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Signs from the US are encouraging, with the news that the states of New Jersey and Nevada are to legalise online gaming and poker respectively. As a result, other US states may contemplate similar actions, however, such developments are in their infancy and there remains much work to do to resolve regulatory, political and practical considerations. A number of strategic partnerships are being pursued to prepare for the potential opportunities offered by this large, diverse market.

Elsewhere, the Company signed an agreement with Mexican market leader Caliente, and management believes that Playtech, given its commitment and proven track record, is positioned as the natural choice for operators in different regulated markets.

Strategic PositioningPlaytech’s strategy of organic development, targeted acquisitions, partnerships and joint ventures has enabled it to maximise opportunities created by the significant changes in the online gaming industry. The industry is moving towards locally regulated markets as governments see the implementation of gaming tax and the sale of regulatory licenses as significant revenue streams. Land-based and digital channels are converging as regulatory authorities issue gaming licenses to land-based casinos for both static and online offerings. Through being able to offer a full turnkey solution, Playtech is able to partner with local brands and casinos to take advantage of these opportunities.

Mobile gaming continues to be one of the most significant growth drivers of the global online gaming industry. Playtech’s launch of the mobile hub in late 2012 has combined the established Mobenga mobile sports betting solution with other gaming products. This combination uniquely positions the Company to capitalise on further developments in this sector. Mobile gaming is essential to Playtech’s future success and we have invested heavily to develop the next generation of products, maximising new functionality on tablets and smartphones, while continuing to roll out products across all mobile platforms, including Android, Apple iOS and HTML5.

Playtech’s proven strategy further strengthened its market position, and the Company is seen as the leading software and services supplier to the online gaming industry, as evidenced by Playtech winning the Gaming Awards for iGaming software supplier of the year.

Acquisitions Playtech’s recent acquisitions, including Mobenga, Ash Gaming and Geneity, along with PTTS, have been fully integrated and continue to deliver significant benefits in terms of revenue, product capability, cross-sell opportunity and licensee relationships.

Playtech’s capacity for further bolt-on acquisitions and joint ventures will be enhanced considerably following receipt of approximately £424 million for the sale of Playtech’s 29% stake in William Hill Online, which is expected to complete by the end of April.

“ Playtech’s recent acquisitions continue to deliver significant benefits in terms of revenue, product capability, cross-sell opportunity and licensee relationships.”

Industry Awards in the Past Year:


On 11 March 2013, Playtech announced landmark software and services agreements with Ladbrokes. The existing Playtech offering to Ladbrokes, which includes the provision of bingo and software for land-based video licensing terminals, will extend to all product verticals other than sports betting, using a phased approach. The second is a significant agreement for PTTS to provide Ladbrokes with advisory services and to license sophisticated CRM methodologies and business intelligence to assist in the development and growth of Ladbrokes’s digital business. This is an outstanding transaction for PTTS, which continues to develop, delivering significant returns for the Company, which are anticipated to increase following the agreement with Ladbrokes.

Products and ServicesIn 2012, Playtech made further investment into its product offering, extending its capabilities both horizontally and vertically through in-house development as well as through the introduction of acquired products. Playtech’s licensees benefitted from the introduction of the mobile hub and portal, as well as the IMS, enabling operators to offer a bespoke player experience available in all formats and channels. The combined system facilitates a two-way information flow from the IMS, providing licensees with greater real-time insight and control, and players with an improved user experience thereby maximising the potential of licensee online gaming operations.

Casino Playtech’s flagship product delivered another outstanding performance in 2012. Revenues increased 33% from a combination of organic growth, the addition of new licensees, expansion of the games portfolio, now including all Ash Gaming products, growth from mobile and the revamped live dealer offering, which is now available through all interactive channels, including mobile. Branded games are a valuable marketing tool for Playtech, and the Company has the largest portfolio of games available across multiple delivery channels including online, mobile, TV and gaming terminals. During 2012, Playtech launched 35 games and 21 branded games.

PTTSPlaytech offers affiliate marketing services and sophisticated CRM solutions, combined with advanced player management tools, which are of particular interest to new market entrants requiring a full turnkey solution as well as existing operators that would like to boost their online gaming operations.

During the year, PTTS grew to become Playtech’s second largest vertical. In July, Playtech announced that PTTS had achieved an annualised adjusted EBITDA in excess of €40 million in the first two quarters of 2012, fulfilling the condition for acceleration of the additional consideration of €140 million. The additional consideration outstanding at year end is scheduled to be paid in three instalments ending in January 2014.

LicenseesPlaytech aims to provide its licensees with market-leading content, features, tools and a broad range of services that support and enhance their businesses.

Betclic Everest launched its poker products on the iPoker network for dot.fr and dot.com. In addition, several other licensees increased the number of product verticals licensed from Playtech. These developments reflect Playtech’s success in strengthening its relationships with existing licensees through an integrated solution, which helps deliver maximum player yields.

Gala Coral completed its three-stage programme to move its entire online gaming operation to Playtech’s IMS, which we believe serves as a significant endorsement of the Company’s market-leading cross-product technology. Playtech now provides Gala Coral with an improved IMS, a newly developed portal, innovative mobile hub, and a full range of gaming products. Gala Coral will use Playtech’s systems to manage all of its online activities including Gala Casino and Gala Bingo, as well as Coral.

Pleasingly, Betfair decided to migrate its poker offering to Playtech’s iPoker network, commencing the migration plan in the year with completion anticipated for July 2013.

In connection with the regulation of the Spanish, French and Danish markets, Playtech gained a number of new licensees. Certain existing licensees also underwent regulation and now offer their services on a dot.local basis as compared to a previous dot.com basis.

Chief Executive Officer’s Report (continued)

Business Review

Playtech’s flagship casino product delivered revenue growth of 33% in 2012.

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The acquisition of PTTS has been highly successful, delivering outstanding results. We have also demonstrated that the ability to offer a full turnkey solution or advisory services is essential to attracting further business opportunities. Through PTTS we can provide operators, both existing and new licensees, including dot.com operators or new entrants in regulated markets, access to best of breed marketing and CRM services as well as other ancillary services. PTTS has a proven track record of more than a decade and is a fundamental element to the future success of the Company.

BingoPlaytech provides the industry’s leading bingo offering and operates the industry’s largest bingo network. Bingo continues to perform strongly, increasing revenue in the period by 19% to €18.0 million (2011: €15.1 million). Strong organic growth was complemented by the launch in the third quarter of Gala Bingo and in the fourth quarter of vernons.com and our mobile bingo offering, which is available on Android and Apple iOS, supported by promotional activity during the final two weeks of the year.

Playtech’s bingo brand, VirtueFusion, has once again won a number of industry awards, including eGaming Review’s Bingo Network of the Year, and the Bingo Summit’s Best Bingo Software, for the third year running.

Poker The international poker market remained challenging throughout the year. However, Playtech recorded an uplift in revenue in the latter part of the fourth quarter and the beginning of 2013 following a number of new licensees joining the iPoker network.

During the year, as part the phased migration plan, Gala Coral launched on the iPoker network followed by Betclic and Everest who launched on the iPoker.fr and iPoker.com networks and Betfair.com, which launched on iPoker.com and iPoker.es. These licensee wins in conjunction with Playtech’s poker liquidity programme initiated in August, significantly increase the poker network’s liquidity, which is seen as key to attracting poker players and licensees when choosing a supplier, and supported the on-going improvement in poker performance. In addition, Playtech also introduced a variation of Speed Holdem which increased revenue from cash games.

iPoker remains the largest and leading worldwide independent poker network. A number of significant licensees are in discussion with Playtech regarding joining the network. During the year a number of new CRM tools and an improved user interface supported by a revamped version of the poker client were launched.

“ The acquisition of PTTS has been highly successful, delivering outstanding results.”

Once again Playtech had a very substantial presence at the ICE gaming show in London in January 2012.


return on invested marketing. Playtech’s experience so far is that mobile presents an incremental opportunity as revenues, margins and activity levels are higher compared with other interactive channels. Mobile remains a key focus for the Company and development continues of the next generation of the mobile offering that will be even more exciting and appealing to a larger audience.

LivePlaytech was the first company to introduce live gaming products specifically tailored for local markets. As technology has evolved, the popularity of live gaming formats has grown significantly. In 2012, the live gaming product underwent a comprehensive redevelopment to include new features and functions appealing specifically to live gaming players and designed to capitalise on our first mover advantage in order to retain that lead. In parallel, we introduced a mobile version for the live gaming product complementing the product offering available on other interactive channels. In 2012, Gala Coral migrated its live casino across its brands and we expect additional licensees to migrate to our live gaming offering in the near future. In Spain, Playtech partnered in January 2013 with Casino Gran Madrid to offer live dealer services to the Spanish market.

Sports Sports is one of the largest gaming markets and frequently acts as the gateway for players to access other gaming experiences. Furthermore, recent events have shown that sports is typically one of the first products to be approved in newly regulated markets. In line with our strategy to provide a comprehensive solution, and our focus on regulated markets, the Company acquired Geneity, a world class, fully integrated and complete sports platform. There are significant opportunities for this business, which has been integrated with both the Mobenga mobile sports product and IMS, and which has already won its first two sports licensees. We expect to see significant growth from sports over the next quarters as more licensees are added.

VideobetIn 2012, Videobet technology was deployed in more than 400 additional terminals, ending the year with approximately 23,000 machines. The expansion of Videobet into emerging and other markets, such as Mexico and Puerto Rico, together with location growth by some existing licensees and new markets currently in test, provide a solid pipeline for 2013.

MobileThe growth of mobile continues to outperform all other product channels. The success by different operators has led to significant investments by the Company to ensure that it captures the market leading position in the space. Following the acquisition of Mobenga, the market leader in mobile sports betting, the Company has initiated an innovative internal programme, called the Mobile Hub, converging mobile sports betting and mobile gaming products into one offering. Enabled by mobile touch screen functionality, the new Mobile Hub creates an exciting new experience for players, with the same products that are available through other interactive channels and share the same poker and bingo pools and jackpots. It also creates for the first time in our industry the ability to acquire players through the sports betting vertical and then offer other verticals within the same application, maximising the

Chief Executive Officer’s Report (continued)

Business Review

Mobile and Mobile Hub

The Mobile Hub combined with the market-leading mobile sportsbook provider and Playtech subsidiary Mobenga, is an open framework designed to integrate content and deliver players a seamless user experience on mobile devices. Through a branded and unified interface, an operator’s full product offering is available to players on their smartphone or tablet and can be customised and managed through a centralised management system.

As an open platform, the Mobile Hub allows operators to integrate any software and content using standard and friendly API’s. The new technology has made it quick and easy to plug-and-play both Playtech and third party mobile content minimising the work load for operators. Built on HTML5 technology, the Mobile Hub is compatible with web browsers, native applications and across all HTML5 ready devices.

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PeoplePlaytech’s people remain key to the Company’s continued success. A great example of the quality of the Company’s employees are their great achievement to ensure that Playtech established itself as market leader in the mobile gaming space, following the introduction of mobile technologies. When the Company assesses potential acquisition targets or potential joint ventures, it places a high value on the existence of a complementary culture of employee service and innovation.

In terms of delivery, human capital is as critical as financial capital. Playtech has continued to invest significantly in human resources to maintain its position as a leading quoted supplier of software and services to the online gaming industry by delivering innovative high quality products and services to its clients.

William Hill OnlineWith the agreed valuation of approximately £424 million for its 29% stake in William Hill Online, together with dividends received over the four years since inception, Playtech has generated a cash return on investment of more than 3.5 times. The success of the joint venture demonstrates the potential of creating significant value by combining a well- established brand with Playtech’s best of breed technologies, products and services. Through participation in this joint venture, Playtech widened the breadth of its expertise and proved how successful and valuable a partnership of this nature can be for its stakeholders. While the sale of its stake will bring to a close a highly successful and profitable joint venture for Playtech, the Company will continue to enjoy a close working relationship with William Hill, which will remain a top-five licensee.

The sale process is expected to complete by the end of April 2013, and the Board, with its advisers, is undertaking a broad review of the most effective use of the proceeds from the disposal, taking into consideration feedback from shareholders and the Company’s requirements going forward. The Board will, amongst other strategic options, assess the potential for further value-enhancing acquisitions, joint ventures and partnerships, focusing on regulated markets, together with the possibility of a return of capital to shareholders. Playtech has a proven ability to provide shareholder value through successful acquisitions and management is confident that this will continue.

OutlookPlaytech has made a strong start to 2013, with average daily revenues for the first 11 weeks of 2013 up over 15% on Q1 2012 and up 5% on Q4 2012.

The anticipated revenue from the number of new licensees who launched during the last quarter of 2012, the introduction of slots in Italy and the extension of existing relationships, such as the migrations of Betfair poker and unibet.fr followed by the progress made in the year to date, such as the landmark agreement with Ladbrokes, secures the Company’s position in 2013 and beyond. Playtech is in a prime strategic position and is well capitalised to take advantage of opportunities from the evolving global regulatory landscape and we look forward to the future with confidence.

Mor WeizerChief Executive Officer14 March 2013


Betting €11.5bn 45.2%

Poker €3.1bn 12.1%

Casino €5.6bn 21.7%

Bingo €1.6bn 6.4%

Skill-Based, Commercial €1.5bn 5.8% Lotteries and Other Gaming

State Lotteries €2.2bn 8.8%

Total €25.5bn 100%

The market continues to benefit from improvedbroadband penetration and capacity, mobile penetration, a growing number of market participants, and greater acceptance of online gaming as a mainstream leisure pastime. Since the passing of the Unlawful Internet Gambling Enforcement Act in 2006, which outlawed online gaming in the US, the main focus of operators has been on Europe and in particular on markets where legislation allows various forms of online gaming on a locally regulated basis. As the US now begins to regulate on a state-by-state basis, the overall interactive gaming market may grow more quickly than rates seen in the last three years, which is in-line with forecasts by H2 Gambling Capital. As further countries regulate, H2 Gambling Capital forecast interactive regulated revenue to grow at a CAGR of 20% over the next three years, whereas total interactive revenue is forecast to grow at 9% over the next three years. Regulating MarketsThe regulation of online gaming in a national market, historically has been a catalyst to substantial market change. Once regulated, typically new entrants are attracted to the market including major local gaming companies such as betting shop operators, lotteries and local casino groups who have historically not been willing to operate online in an unregulated format.

The ability to advertise more freely across a broad range of media formats, such as TV and online, raises awareness of online gaming as a leisure activity and drives an increase in player interest, which is also underpinned by a perceived safer player environment. It is the combination of these factors that have led to major growth in players and revenues in markets such as the UK and Italy. For Playtech the opportunities across a range of newly regulated and soon to be regulated markets are substantial as a broad range of providers look to participate.

While global statistics are hard to verify, it is believed that onshore interactive gross gaming win (GGW) reported by the global gambling industry, including sports betting, casino, poker and bingo, from regulated jurisdictions increased to €7.8 billion in 2012 from €6.6 billion in 2011 (Source: H2 Gambling Capital). The UK, a fully regulated market, is predominantly offshore, and adds a further €2.5 billion to the €7.8 billion stated above. Over the last five years, the GGW referred to abovehas grown at a compound annual rate of 12.2%.The figure for 2012 comprises €6.5 billion (82.8%) from sports betting operations, which Playtech views as a significant opportunity since acquiring Geneity and integrating its products onto Playtech’s IMS platform. The remainder comprises €343 million (4.4%) from casino, €804 million (10.3%) from poker and €197 million (2.5%) from bingo.

H2 Gambling Capital estimates that the interactive gaming sector, including sports betting, casino, poker and bingo achieved €21.8 billion in GGW in 2012 (2011: €20.5 billion), comprising 53.1% from sports betting, 25.4% from casino, 14.1% from poker and 7.4% from bingo.

Adding skill-based, commercial lotteries, state lotteries and other gaming to the above, total interactive GGW in 2012 was €25.5 billion. Interactive GGW as a percentage of total GGW (land-based and interactive) was 8.1%. Interactive is growing at a higher rate than the land-based retail sector, evidenced in the adjacent graph, and this trend is forecast by H2 Gambling capital to continue into the future. Online DevelopmentThe online gaming market developed inthe mid-1990s, first with online casinos andthen with poker from 1998. In 2004 the marketwas estimated by H2 Gambling Capital ashaving revenues of approximately €9.3 billion, and it grew substantially throughout the secondhalf of that decade, to a total of €25.5 billion in 2012, as stated above.

Industry OverviewThe pace of change within the gambling industry is increasing as regulation increases. Playtech is determined to retain its leadership in providing the widest range of software and services to the broadest range of participants worldwide.

Business Review

Interactive Gross Gaming Win by Product

Source: H2 Gambling Capital

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The tax regime within a jurisdiction has a material impact in determining whether online gaming is likely to be commercially attractive in the longer term. In addition, the products that are permitted when a market regulates will also determine its attractiveness for potential participants. The implementation of regulation is expected to remain a key focus for market participants and an important driver of online gaming revenue growth over the next few years. As markets move from a ‘dot.com’ to a ‘dot. national’ regime, there are expected to be notable opportunities together with some potential headwinds and uncertainties through the transition period.

Over the past two years there has been considerable momentum in countries regulating or looking to become regulated in online gaming, and in 2012 regulation was introduced in Spain, Belgium and Denmark, while Italy introduced more products to an already regulated regime. In Germany, Schleswig-Holstein issued a number of licenses (including two to a joint venture vehicle of Playtech and Gauselmann), but the overall regulatory environment in Germany remains unclear. The Netherlands and Greece are proceeding in becoming regulated markets. Countries around the world continue to regulate, using as a model, the experience of other countries that have already undergone regulation. At 31 December 2012, there were 12 counties that were regulated for some form of online gaming (31 December 2011: 9 countries).

“ For Playtech the opportunities across a range of newly regulated and soon to be regulated markets are substantial.”

Market ParticipantsThe online gaming industry accommodates a wide range of participants, who choose on entry whether to develop the necessary software, content, systems and marketing themselves, or to outsource various elements to providers such as Playtech.

Industry participants have traditionally been defined within two categories:

B2C: The B2C sector includes all player-facing activities such as marketing and delivery of the gaming experience. Operators typically have a strong marketing-led business model and seek to attract players to their website and encourage ongoing loyalty from their active players.

In addition to commercial operators, there is a growing B2G segment, comprising state-owned or state-controlled entities such as lotteries and other organisations.

B2B: Supporting the aforementioned operators are a number of technology providers offering software platforms, specialist products and services and games content.

Such providers compete in offering the highest-quality gaming products or systems capable of achieving the operators’ business objectives.

Playtech is the largest listed B2B provider, offering a full product suite that includes the world’s largest bingo and poker networks. These networks provide Playtech’s licensees with the benefits of increased liquidity, joint marketing, plus networked jackpots. Unlike a B2C partnership, licensees can still manage their own business activities and maintain their independence from the platform provider.

Interactive Gross Win by Regulated vs. Unregulated



2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P 2013E 2014E 2015E0

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Industry Overview (continued)

“ Advances in technology have also improved the operator’s player management systems, delivering features such as real-time analytics and VIP management tools. A significant milestone has been the ability to offer a single wallet across all platforms.”

Business Review

Turnkey ServicesOnline gaming is a relatively new, dynamic, industry that requires differentiated specialist skills and assets, from traditional land-based operations. As local or land-based operators seek to add a complementary online offering to their existing business, or as media companies seek to enter the industry, they have increasingly looked for help from an experienced partner with the ability to offer a range of services up to a full turnkey solution. Such a solution would include the know- how and manpower necessary to ensure the new business can comply with any relevant legislation and compete against the sophisticated marketing capabilities of well-established online operators from day one.

Competition and Market PositionPlaytech has traditionally faced competition for B2B mandates from other software providers, typically of smaller scale. More recently there have been B2C operators that are looking to minimise their own risk when entering a newly-regulated market by partnering with substantial and well- recognised local businesses.

This gives them access to a local profile and enhanced player liquidity, which they might not otherwise enjoy themselves. In return they typically look to offer a white-label turnkey solution for their local partner.

Playtech’s positioning in the industry remains constant as a B2B provider, focusing on providing scale and breadth of product offering, and ensuring that licensees have the most advanced technology and operator platform in the industry with best-of-breed tools and content.

Player ManagementAdvances in technology have also improved the operator’s player management systems, delivering features such as real-time analytics and VIP management tools. A significant milestone has been the ability to offer a single wallet across all platforms and product segments. This enables players to move across games or products without changing user account.

This technology is also used to provide greater player protection to prevent under-age and problem gaming, and includes age verification tools, tracking player activity and self-exclusion tools. It also monitors the network for evidence of money laundering.

Interactive Gross Win Margin (all products)

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Improved player management systems are key elements in increasing player loyalty and enhancing an operator’s cross-selling potential as players are encouraged to play more frequently and for longer periods. This can now be combined with cross-platform capabilities through server-based gaming terminals, mobile phones and tablets using browser-based technology, and download.

Convergence of Online and Land-BasedA significant industry trend is the growing convergence of land-based and online market segments. This is principally as a result of many new entrants in regulated online markets being existing land-based gaming, betting and lottery operators, who already have a substantial local presence, well-recognised brands, existing player databases and are familiar with the local regulatory environment.

Historically separate in their philosophy and systems, there has been a fundamental shift in both segments towards common techniques for player attraction and retention, such as VIP levels and loyalty schemes. Operators are becoming more aware of the importance of player retention and of incentivising the player on an individual basis regardless of channel. The retention of players and the ability to cross sell them onto other products provides opportunity for operators, but also presents substantial technical challenges for them.

Playtech has focused much of its recent development efforts on ensuring that it is able to deliver functionality, player management and content across the full range of distribution channels, and to capitalise on this trend of convergence. It has proactively developed

the most sophisticated of server-based gaming systems; unique capabilities in TV and broadcast; and cutting-edge mobile and online products. All are managed by a single operator platform with a single player wallet across all formats.

The gaming industry is undergoing fundamental and structural change and Playtech is determined to remain a market leader in providing technology and services to the broadest range of participants with a focus on regulated business.

Consolidation of the Gaming Market As evidenced by the recent offers for Sportingbet plc and betdaq.com, the industry is beginning to show signs of consolidation. Driving these trends is the increase in licensing costs, the limited number of licenses issued by regulated countries, decreasing margins in part because of increased taxes as a result of regulation and B2C market saturation in certain verticals. Keeping up to date with technology, the need for player liquidity and marketing spend are also believed to be contributors to market consolidation.


Turnkey Solutions (PTTS)

Joint Ventures

Products

Live & TV Gaming

Internet

MobileTV

BroadcastSocial

Gaming Machines

Lottery

Casino

Games

Poker

Bingo

SportIMS Information

Management Solution

Business Model & StrategyPlaytech’s strategy, supported by its strong balance sheet, centres on developing three highly complementarybusiness channels: products and services; turnkey solutions; and joint ventures, with organised growth and targeted acquisitions.

Shareholder ValueMaximising Opportunities

Business Review

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Playtech offers a full suite of gaming products, including casino, bingo, poker and sports along with ancillary services including marketing, operational support, advisory and network management services, all of which are supported by the highly sophisticated information management solution. The IMS is the core component and key differentiator of Playtech’s offering, and can be customised through a variety of network management tools and features.

Through PT Turnkey Services (PTTS), Playtech has a comprehensive single source solution to the online gaming industry; of particular interest to the growing number of new entrants targeting regulated online markets.

Playtech’s strategy is to identify new partners with which to establish long-term ventures. In markets such as the UK, Germany and South Africa, Playtech has been chosen as a joint venture partner by leading land-based operators.

Playtech is the supplier of choice to over 110 licensees in the gaming industry, because of the best of breed products, scale and breadth of player networks in bingo and poker, the industry’s largest content library, and most importantly, the cutting-edge information management solution. The IMS, which is Playtech’s key competitive advantage, acts as a backbone for the entire Playtech business model, allowing operators to acquire, convert and retain players using specific tool and services, thereby maximising player value and lifetime, as well as enhancing the player experience. The IMS provides a single account registration or sign-on for multiple products (casino, bingo, poker etc.), a single wallet with multiple balances, enabling players to make a seamless transition between products, which can be accessed through multiple distribution

channels, including download, web, mobile, TV and land-based. This functionality is enhanced by Playtech’s services solution, which provides marketing, CRM, operational support and payment advice up to a full turn-key solution. Through ongoing R&D and bolt-on acquisitions, Playtech will continue to develop its product and content offering into new or complementary areas, including expanding its cross-platform capabilities. In 2012 Playtech added two product verticals, Social Gaming and Binary Options, which are still in their infancy. It also acquired Geneity, which increased the sportsbook offering, creating a one-stop shop for gaming operators. Playtech’s focus remains on regulated markets, with a dynamic product and services offering fully compliant with the evolving regulatory landscape.

As a result of more than a decade of experience, PTTS offers a number of value adding services including affiliate marketing penetration, the most advanced player management systems, operational support including fraud, network management, hosting, reconciliation and payment advisory services, all designed to leverage the market-leading tools delivered by Playtech’s IMS. For many operators, particularly in emerging and newly-regulating markets, there is a clear need for a partner that, along with a premier

product offering, can deliver the very best marketing and operational support services to compete in highly competitive new markets. Recently, Playtech signed a structured agreement with Ladbrokes to provide marketing and advisory services, including sophisticated business intelligence and CRM systems along with access to Playtech’s full product suite, technology and the IMS back office system. This offering is expected to accelerate Ladbrokes’ online and mobile revenues and grow the lifetime values of Ladbrokes’ digital customers.

These partners are looking to develop a market-leading online offering, supported by highly experienced marketing and player management capabilities. Joint venture partners recognise the benefits of Playtech’s expertise when they are competing against established international businesses transitioning from being offshore dot.com operators to local market participants.

In each case Playtech will provide its localised service expertise while its local partners commit their gaming brand, any online operations, customer lists and management to the new joint venture. It is anticipated that both parties’ interests are aligned through the injection of working capital and/or certain assets into the venture.

IMS and Products

Turnkey Solutions

Joint Ventures


Products

The IMS is a cross-platform infrastructure, enabling online, broadcast, mobile and land-based platforms to be managed through a single administrative system. Sophisticated CRM tools enable operators to better understand players’ gaming behaviour, using a single interface that generates reports to analyse every player on the network, or a predefined segment. Recent innovations include a quick deposit feature located in all lobby and game windows, making depositing an easy and immediate process, a mobile hub linking Playtech’s award winning Mobenga platform to the rest of Playtech’s product verticals and the Playtech portal which enables operators to provide players with a bespoke user-interface.

In addition, a ring-fencing feature enables players who are registered at a multi-product brand to facilitate play and bonusing without the need for funds transfer. Together, these tools enhance an operator’s ability to attract, convert and retain their player base, while encouraging players to try new or unfamiliar products, enhancing player yields.

With its open gaming platform, the Playtech casino offers the best games library in the industry, including unrivalled branded content, and hundreds of games integrated from various third-party developers. A best-of-breed back office system provides unique bonusing capabilities.

Open Gaming PlatformPowered by Playtech’s EdGE technology, Playtech’s open platform offers operators the opportunity to enjoy Playtech’s own extensive content library, as well as new games from various third-party providers, all developed using the same EdGE technology. Combined with the strength and capabilities of Playtech’s IMS, this open platform is unrivalled in the industry.

Dashboard for KPI Monitoring Enhanced analysis tools allow licensees to generate reports and statistics on all aspects of their players’ activity, enabling segmentation of the player base, in order todefine marketing strategy and future spend. The dynamic operational dashboard provides an at-a-glance view of KPIs, using clear graphs and charts to display key business trends including player numbers and activity, earnings per active player, player churn, bonus costs, deposits, withdrawals and declines. These real-time reporting and advanced marketing tools play a key role in player retention and conversion.

Player EngagementBy providing the tools to understand their players, Playtech assists licensees to devise appropriate marketing strategies accordingly. Furthermore they can communicate these promotions in the most relevant way to a particular player segment, through offline and online communication tools, and chat applet, all in multiple languages.

Games PortfolioPlaytech’s expanding games library continues to incorporate a careful selection of branded games designed to help licensees draw in new players and to excite their existing players through mass-market appeal.

The most notable 2012 releases include Monty Python’s Spamalot, The Sopranos, Cowboys & Aliens, Baywatch, Little Britain, John Wayne, Thor, Captain America and Marilyn Monroe.

Business Review

Highlights: > Migration of Gala Coral onto the IMS platform > Development of improved IMS through the

launch of the mobile hub and portal

Highlights: > Now includes all Ash Gaming products > Revamped live dealer offering > Winner of EGR slot provider of the year

The IMS is the backbone of Playtech’s offering controlling all products and generating higher levels of player conversion and retention potential, it drives profitability through maximising cross-selling opportunities.

Playtech’s casino isthe Company’s flagshipproduct, and continuesto be the leading onlinecasino in the industry.

IMS (Information Management Solution)

Casino

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client or web-based product. The fast and seamless integration allows games to be implemented across the entire product portfolio, enabling valuable operator cross-selling opportunities.

The incorporation of the EdGE system into Playtech’s IMS provides licensees with additional tools to manage their online operations, including comprehensive reporting, account management, customer support and promotional tools. EdGE also forms part of Playtech’s cross-platform solution; games on the platform can be played using download, web, mobile and tablet, TV and land-based VLTs using a single account with one wallet.

Games TabPlaytech’s open platform was developed by Gaming Technology Solutions (GTS) which was acquired in December 2009. GTS partners with industry-leading game developers around the world, and through its Enhanced Gaming Engine (EdGE), operators have access to content from these third-party suppliers, enabling a regular offering of new games in addition to localised content for particular markets.

The games library is continually expanding, as developers come up with new and exciting games and variations. Games on the EdGE Platform support multiple domains, are available in 30 different languages in most currencies.

Via the EdGE platform operators can choose from over 500 games, from more than 20 different content providers. Along with integration to any games, bingo or casino offering, operators have the option of embedding ‘mini’ or popup formats into their live sportsbook application.

The platform was designed as a cross-channel content delivery solution, with the ability to seamlessly integrate games to new and existing online operations, either as a downloadable

The live dealer and TV formats attract a broad range of participants who enjoy interaction with the dealers, the sense of trust when playing with real cards on real tables, and the enhanced community-feel of the playing experience, across a range of casino table games.

Live Dealer Games Playtech’s live dealer centres are designed as real, land-based casinos, which enable

operators to attract traditional land-based players into the online arena. Live games also play a key part in an operator’s conversion strategy; the option to use a private table area allows operators to fully promote their brand and other product offerings, through specific targeted promotions.

Operators can offer fully-integrated casino mini games alongside the live dealer games, generating valuable cross-selling opportunities. The product is updated regularly to enhance and maximise player engagement, including much faster streaming capabilities. The live product has a clear and efficient user interface, and the use of top of the line cameras positioned at multiple viewpoints delivers HD broadcast quality, enabling players to immediately experience the live land-based ‘look & feel’ of the studio.

Highlights: > Easy integration of games onto Playtech’s

IMS either as a downloadable client or web-based product

> Largest library of games with over 500 games available

> Content from 20 different content providers

Highlights: > Underwent a comprehensive redevelopment > Includes new features and functions

designed to capitalise on Playtech’s first mover advantage

> Partnered with Casino Gran Madrid to offer live games to the Spanish market

Ash Gaming provides an entire new portfolio of proven content, which is embedded in the casino platform and offered to all casino licensees.

Bringing live games tomultiple platforms includingweb, TV, mobile, and tablets,Playtech’s live product takes the authenticity of the land-based experience into the home and on the go.

Games

Live Games


Products (continued)

Virtue Fusion’s product offers the industry’s largest range of bingo variants, branded content and side games which delivers peak traffic of up to 16,500 concurrent daily players.

Product DevelopmentVirtue Fusion has continued to focus on adding value across its licensee network through ongoing product development. A notable development being the launch of mobile bingo on Apple iOS and Android for use on tablets and smartphones. Virtue Fusion’s loyalty system also allows each licensee to set up a completely bespoke loyalty programme for their players by assigning specific programme names, different numbers of loyalty levels, a range of accrual rates per level, and various redemption rates per level and per bonus category.

The popularity of side games, which account for approximately 38% of total bingo revenues, give the players access to the more than 500 leading games and over 60 embedded mini games, specifically designed for the bingo playing audience. GTS EdGE with Virtue Fusion give licensees access to Playtech’s ever increasing suite of market-leading branded and proprietary games in mini and full-screen formats.

EnhancementsThe iPoker network has the leading liquidity and offers a vast range of tournaments. The player experience was enhanced during 2012 by improving the user interface and the ecology of the network through the poker liquidity programme.

Superior performance, memory utilisation and high-resolution options ensure a smoother game flow for players, delivering continuous, uninterrupted gameplay. The lobby integrates cutting-edge design elements with slide animation, reflecting iPoker’s forward-thinking approach when it comes to player retention.

Additional developments have added greater personalisation to the network to drive deeper player engagement and achieve higher player retention and lifetime value.

With the unrivalled liquidity of the network supporting a huge international prize pool, licensees can deploy quickly in all markets, offering the most attractive promotion and life changing prizes.

Regulated MarketsPlaytech provides operators with exciting opportunities as newly-regulated bingo markets start to open up. Playtech’s Italian bingo network already has the region’s leading operators on board, including SNAI, SISAL, Eurobet and Codere, with more major licensees set to join the network.

Improved User ExperienceThe fully customisable client supports multiple languages and currencies and offers exclusive side games, a tournament calendar and the fastest poker variation, speed Hold’em. Regular online satellites, land-based events, plus daily, weekly and monthly tournaments have a guaranteed prize fund of over €10 million a month.

Business Review

The bingo network of choice for blue-chip gaming companies worldwide, Playtech’s Virtue Fusion networks provide an award-winning bingo offering, connected to the industry’s largest bingo liquidity pool with over 65,000 daily players.

Home to Europe’s leading operators, Playtech’s iPoker network is the largest independent poker network in the world, with over 35,000 concurrent players at peak time.

Poker

Highlights: > Enhanced liquidity programme initiated

in August > Launched a variation of speed hold’em > Betclic Everest Group launches its Everest

and Betclic poker brands with Playtech > Betfair launched with iPoker in early 2013 > Easy integration of new licensees

Bingo

Highlights: > Further strengthened its position as the

largest bingo network in the .com market > Launch of Gala Bingo in May 2012 > Launched mobile bingo on 24 August

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The Videobet product encompasses both terminal software and control systems. These can be configured to meet a wide range of operational requirements, from VLT or remote multi-site operations to casino and slot hall management. Videobet provides access to the entire Playtech games portfolio, including all branded and licensed content.

For an operator, the core of the offering is the server-based technology that allows for remote management or on-demand changes. These range from real-time management of games or bonuses, remote updating of software, or full terminal-level financial reporting and control.

Videobet works closely with its licensees to ensure that the product is localised to meet their specific requirements. The unified back office system allows for real-time monitoring, control and updating of all gaming machines from a single application and has the ability to connect to, and monitor, machines from third-party vendors.

2012 PerformanceBy the end of 2012, in conjunction with The Global Draw, the UK’s leading provider of server-based gaming terminals, Videobet had deployed over 23,000 terminals in the UK, Mexico and Puerto Rico.

Videobet provides a complete end-to-end solution for land-based gaming operations, ranging from standalone gaming machines to server supported fixed odds betting terminals (FOBT) and full server-based Video Lottery Terminals (VLT).

Videobet

Highlights: > Added approximately 400

additional terminals > Over 23,000 machines deployed > Offers true server-supported and

server-based gaming solutions > Game optimisation and remote software

updates lead to reduced downtime and increased revenue

Cross Platform CapabilityPlaytech Mobile enables valuable operator cross-selling opportunities across casino games, poker and live sports betting and offers players a seamless transition between web and mobile, using the same account and wallet.

In what is a very fast-growing gaming channel, Playtech has significantly enhanced its mobile offering through the introduction of the Mobile Hub, which links Mobenga’s sportsbook offering to the remainder of Playtech’s product verticals. This gives players access to Playtech’s full offering through high-end smartphones and tablets, including iPhone, iPad, and Andriod devices.

Mobile Marketing A range of specialised marketing tools, including Web2mobile user conversion tools, targeted promotions via SMS and an ‘Invite a friend’ feature, allow operators the ability to leverage the mobile platform and maximise cross-sell opportunities.

Mobile BingoMobile bingo was launched on 24 August 2012, enabling access to Playtech’s bingo network, accessing the same jackpots and prizes found online, with the ability to pre-purchase tickets via the mobile device.

Complete SolutionThrough Playtech’s exceptional mobile betting channels and cross-product opportunities, a wide range of choices is become available to players, eliminating the need for different mobile applications. Another implication of this development is that those who download the mobile application will automatically have access to Playtech’s complete suite of products, regardless of which channel was originally chosen.

In-line with Playtech’s strategy, the addition of the Mobile Hub and Mobenga’s world class mobile sports betting platform, Playtech’s mobile products play an integral part of thecross-platform offering.

Mobile

Highlights: > Significant enhancement of mobile

gaming capabilities > Launch of Playtech’s Mobile Hub,

linking Mobenga and Playtech’s other product verticals

> Launch of mobile bingo


In June 2012, Playtech entered into a software licence agreement with Skywind Holdings, providing the Company with a wide range of both social gaming and real money software, primarily focused on the rapidly expanding social gaming market and strengthening the Company’s mobile gaming product range respectively.

Access to a Large Developed MarketSocial gaming has experienced significant growth over the last two years and is now a multi-billion dollar market with revenues generated in a number of ways, including the real money purchase by end users of social currency such as Facebook credits. Playtech has been monitoring developments in the social gaming arena closely, analysing a number of ways to offer current licensees and third party

brand access to the social gaming market. The software licence agreement provides Playtech with access to a broad range of social gaming platforms and products in addition to complementary real money products and further development potential giving them a unique position in the market.

Positioning Playtech for the FutureThe combination of Playtech’s wide distribution channels, expertise in content development, back end and online marketing capabilities, and the broad range of products licensed under the software agreement, positions the Group the amongst the leading B2B providers to the social gaming market. Playtech will have the ability to offer cross platform capabilities for a full suite of products, including social casino, poker, bingo and rummy.

Business Review

With the industry turning its attention to social gaming, Playtech is at the cutting edge of this movement, penetrating the market to offer our licensees a range of leading social products.

Social

Highlights: > Licensing deal with Skywind Holdings

to offer social gaming and real money software to the market

> Potential for building a significant new stream of additional earnings for Playtech

Products (continued)

SportsPlaytech has substantially increased its sports betting capabilities in the past year and now has a highly sophisticated solution across both online and mobile channels.

GeneityIn January 2012, Playtech acquired Geneity, the developer of a next generation and fully-featured sportsbook GenBet. Geneity’s platform is a highly competitive, flexible offering, designed to take advantage of the latest trends, concepts and technologies. Its sportsbook platform, GenBet, has sought to provide significant structural improvements on existing management systems to take Playtech’s sportsbook offering to the next level.

The GenBet architecture is modular in design, robust, proven and highly scalable allowing the same basic system to be tailored to both large and small operators. The platform has been designed to address bottlenecks experienced in traditional sportsbook platforms, whether in terms of speed of pricing or bet placement, or in development time-to-market for client-facing tools and features.

MobengaPlaytech’s leading mobile sportsbook platform allows operators to have a fully integrated mobile sports betting offering, delivered seamlessly onto handheld devices including smartphones and tablets, across a number of operating systems (see further information on the following page). With further mobile growth being forecast, Mobenga coupled with Geneity’s leading edge technology is well placed to deliver to of those licensees wanting to gain further market share.

Playtech’s sports betting capability has been transformed with the acquisition of two market-leading developers focusing on mobile and online segments.

Sports Betting

Highlights: > Launched the mobile hub, linking

Mobenga’s leading sportsbook offering to Playtech’s other product verticals

> Full integration of the most exciting sports betting platform developer, Geneity

> Launched 2 licensees with Geneity, with further licensees to join in the near future

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RELAXING STAYS. EXCITING TIMES.

PartnershipsTwo joint venture partnerships and a structured agreement with Ladbrokes signed in past 14 months.

Highlights: > Accelerates ability to drive online and

mobile revenues using Playtech’s highly sophisticated products and services

> Interests closely aligned through structure of success fee

It is anticipated that over the medium-term, Playtech’s industry-leading IMS will become the foundation of Ladbrokes’ digital back-end, enabling Ladbrokes and its customers to enjoy the benefits of a fully integrated experience across all products and channels.

From May 2013, PTTS will advise and assist Ladbrokes in driving its digital revenues by introducing sophisticated methodologies and business intelligence systems, developed by PTTS, in order to maximise customer lifetime values accelerating the growth of Ladbrokes’ digital business.

In addition to the royalties to be generated under the terms of the software agreement, the Group will be entitled to a success fee for the advisory services provided by PTTS, based upon the improvement in Ladbrokes’ digital EBITDA between FY2012 and FY2017, with interim instalments falling due if EBITDA uplifts of £35 million, £70 million and £100 million are achieved in an earlier year. 75% of the success fee is payable in cash, with the balance payable in Ladbrokes shares, with Playtech able to elect to receive a greater proportion of the success fee in Ladbrokes shares.

The success fee is calculated in accordance with the following formula: 27.5% x increase in adjusted EBITDA over Base EBITDA x the then prevailing Group EBITDA multiple of Ladbrokes. 75% of any interim instalment is payable immediately with the remaining 25% deferred until the earlier of the achievement of the next interim instalment or the end of the period over which the success fee is measured.

If by 31 December 2017 the adjusted EBITDA uplift reaches more than £100 million, Playtech would be entitled to an additional bonus fee, calculated as 75% of the amount exceeding £100 million, subject to a cap of £50 million. The aggregate success fees payable to PTTS under the advisory services agreement are capped at a level that does not require Ladbrokes’ shareholder approval.

GauselmannThe joint venture with Gauselmann was signed in January 2012, and was awarded casino and sports betting licenses from the state of Schleswig-Holstein in early 2013.

Founded in 1957, Gauselmann has developed its laughing Merkur sun into the most recognizable German domestic gaming brand. With Group revenues in excess of €1.7 billion in 2011 and over 6,300 employees, Gauselmann is one of Europe’s leading gaming groups, with operations across Germany focused on the development and production of amusement and gaming machines and related gaming content, along with over 200 gaming arcades operated by its Merkur Spielothek division.

While the regulatory position remains unclear, a number of license holders are planning to launch services across Germany in 2013 utilising their Schleswig-Holstein licenses.

PeermontPeermont is the second largest land-based casino operator in South Africa, entered into a joint venture with Playtech in January 2012. Regulation of online gaming is not expected in the short-term. LadbrokesIn March 2013, Playtech announced a landmark agreement that expands its existing software and technology agreements with Ladbrokes and separately that Playtech’s PTTS will provide Ladbrokes with advisory services to assist in the development and growth of its digital business.

The new software agreement, which provides Ladbrokes with access to Playtech’s full technology and product suite, will commence with the launch of a new ‘Vegas’ tab on Ladbrokes’ digital platforms, offering a suite of casino and games products across online, mobile and tablet, with the other products to follow in due course.

“ The breadth and depth of the software and services to be provided under these agreements are unique to Playtech, and reflect the Group’s successful acquisition strategy.”


Adjusted EBITDA for the year was up by 49% to €186.7 million (2011: €124.9 million), and adjusted net profit increased by 49% to €168.5 million (2011: €112.8 million). Excluding the impact of acquisitions in 2011 and 2012, Playtech achieved 22% growth in both adjusted EBITDA and adjusted net profit. After further excluding the share of profit of William Hill Online, adjusted EBITDA and adjusted net profit increased by 13% and 11% respectively, which is after the effect of the increased costs in 2012 following an expansion in operations to enable continued development of existing products, investment into new products such as mobile and supporting the Gala Coral project among others.

Adjusted EPS rose by 26% to 58.1 € cents (2011: 46.2 € cents) and diluted adjusted EPS increased by 25% to 57.1 € cents (2011: 45.7 € cents). The growth rates of the adjusted and diluted adjusted EPS were lower than the growth rate of the adjusted net profit due to the full year effect on the weighted average number of shares following the £100 million share placement of 46.5 million shares undertaken in December 2011.

Playtech remains highly cash generative, with a cash conversion rate of 88% from adjusted EBITDA (2011: 88%). Cash balances on 31 December 2012 were €120.9 million (2011: €164.8 million) after payments of €143.1 million (2011: €97.2 million) related to acquisitions made during the year. Net cash (defined as cash and cash equivalents less bank borrowings) on 31 December 2012 was €51.7 million (2011: €137.3 million).

Playtech has again delivered an exceptional financial performance, with gross income for FY2012 increasing by 51% to €368.1 million (2011: €243.6 million), and total revenues for the year increasing by 53% to €317.5 million (2011: €207.5 million) driven by both strong organic growth, introduction of new business and the full year effect of acquisitions undertaken during 2011.

Excluding the impact of acquisitions in 2011 and 2012, which include PTTS, Mobenga, Ash Gaming, Geneity and IGS, Playtech achieved 23% growth in gross income and 19% growth in revenues.

The directors believe that in order to best represent the underlying trading performance and results of the Group, the following cash and non-cash charges should be excluded: professional and finance costs on acquisitions, one-off legal costs related to litigation with William Hill in 2011, costs relating to the move to a Premium Listing on London’s Main Market, decline in fair value of available for sale investments and employee stock options expenses (adjustments to EBITDA), amortisation of intangibles on acquisitions, amortisation of intangibles in William Hill Online, one-off tax credit and exchange differences on deferred consideration (adjustment to net profit). A reconciliation of these adjustments are set out in the table below and in Note 5 to the financial statements.

Financial Review “In my first full-year report as Chief Financial Officer, I am very pleased to be able to report that Playtech has again delivered an exceptional financial performance.”

Business Review

Adjusted Basic EPS

Adjusted EBITDA

€186.7m +49% 2011: €€124.9m

Total Revenue

€317.5m +53%2011: €€207.5m

58.1 € cents +26%2011: 46.2 € cents

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RevenuesTotal revenues increased by 53% to €317.5 million (2011: €207.5 million). As indicated above, revenues excluding acquisitions, increased by 19% to €194.8 million (2011: €163.1 million). Of the increase, 11% was derived from organic growth from existing licensees and 8% from new business, defined as new licensees or new products that were launched in the past 18 months.

Casino revenues were €151.7 million (2011: €114.4 million), an increase of 33% over 2011. After excluding the impact of the Ash Gaming acquisition, casino revenues increased by 27%, of which 6% derived from live casino, 3% from mobile casino, and 4% from branded games where an additional premium is charged.

Services revenues grew by 147% to €106.3 million (2011: €43.0 million) reflecting a full year contribution from PTTS, acquired on 1 July 2011, organic growth and new business consisting mainly of the Asian marketing agreement entered into at the beginning of 2012.

Bingo revenues were up by 19% to €18.0 million (2011: €15.1 million), mainly as a result of organic growth, with a further contribution from the launch of Gala Bingo in Q4 2012 and the introduction of mobile bingo in the second half of the year.

Poker revenues decreased by 18% to €17.8 million (2011: €21.8 million) reflecting market trends, however, following the poker liquidity programme changes made during the third quarter, and Betclic Everest and Betfair joining the iPoker network during the fourth quarter, the trend of revenues changed to growth towards the end of 2012.

Videobet revenues increased by 39% to €10.8 million (2011: €7.8 million) reflecting a full year impact of the UK contract with SG Games (previously called The Global Draw). In June 2012, William Hill terminated its contract with SG Games, which decreased the number of machines deployed by SG Games by approximately 2,000. This was offset by further deployment of machines by Ladbrokes, Coral, and other operators in Mexico and Puerto Rico, eventually resulting in a net increase in machines deployed of over 400 in 2012.

As anticipated, the inclusion of revenues from acquisitions undertaken during 2011 increased the revenue contribution from top licensees in 2012. This was mostly caused by the acquisition of PTTS where two significant existing software licensees were also significant PTTS licensees. The number of licensees generating over €1.0 million of revenues grew from 32 to 41 and those over €4 million increased from 10 to 12.

The adjusted EBITDA margin remained flat compared to 2011. After excluding Playtech’s share of profit from William Hill Online, the adjusted EBITDA margin was 43% (2011: 43%).

Excluding acquisitions completed in 2011 and 2012, the adjusted EBITDA margin was 56% (2011: 57%), and when excluding acquisitions and Playtech’s share of profit from William Hill Online, the margin was 45% (2011: 47%). This small decrease is a result of the incremental costs related to the licensing agreement with Skywind Holdings, and an increase in employee and outsourcing costs in 2012 related to an expansion of operations for the development and deployment of existing products and investment into new products, such as mobile and sports.

Following the growth of PTTS in 2012, which triggered acceleration of the consideration due on its acquisition in the middle of 2012, adjusted EBITDA for the year was €42.1 million (2011: €11 million), representing a margin of 40.5% (2011: 26.3%). As indicated, the increase in margin of PTTS was significantly influenced by the Asian marketing agreement signed in the beginning of 2012.

Cost of OperationsAdjusted operating expenses, before depreciation and amortisation, increased by 54% to €181.3 million (2011: €116.8 million) mainly due to additional operating expenses associated with the acquisitions made in 2011 and 2012.

Revenue-driven costs are mostly comprised of direct marketing costs related to PTTS affiliate fees, and license fees paid to third parties including games developers and branded content, which are typically calculated as a share of the revenues generated. These costs have increased due to acquisitions, and as a result of an increase in popularity of branded games and live games. Revenue driven costs in 2012 reflect 11.4% from revenues (2011: 12.1%) and after excluding the impact of acquisition, these costs reflect 9.1% from total revenues (2011: 9.7%).

Employee and outsourcing costs totalled €99.9 million (2011: €64.3 million), net of €10.6 million capitalised development costs, which represents 11.2% of total employee-related costs (2011: 12.2%). These costs have increased mainly due to acquisitions undertaken in 2011 and 2012, but have remained consistent at approximately 70% of adjusted non-revenue related costs, despite the Group’s average headcount increasing by 183% over the past two years. After excluding the impact of acquisitions, employee related costs have increased by 59% as a result of the Group bolstering its operations for the continued development of its existing offering, launching significant projects (including Gala Coral), new products and platforms, such as mobile and sports which are the foundations for future growth. Such investment allows the Group to penetrate new markets, facilitate future organic growth through the improvement of its overall product offering, increasing the portfolio of its licensees, thereby gaining additional market share and increased revenues. As stated above, this has resulted in a margin decline when excluding WHO and acquisitions.

Playtech has maintained a careful focus on managing cost inflation across the business, and other cost line items have remained stable.


Financial Review (continued)

Business Review

Adjusted Net Profit and Adjusted Earnings per Share

2012

€’0002011

€’000

Net profit 86,755 77,696

Amortisation on acquisitions 26,656 15,838

Amortisation of intangibles in William Hill Online 5,729 5,729

Finance costs – movement in deferred and contingent consideration 44,184 6,075

Employee stock option expenses 2,403 4,678

Admission to Premium Listing on the Main Market 2,098 –

Professional costs on acquisitions 496 1,488

One-off legal costs relating to the litigation with William Hill – 1,389

Decline in fair value of available for sale investments – 551

Exchange differences on deferred consideration – (26)

One-off tax credit – (571)

Adjusted net profit 168,321 112,847

Adjusted net profit margin 46% 46%

Adjusted basic EPS (in euro cents) 58.1 46.2

Adjusted diluted EPS (in euro cents) 57.1 45.7

Analysis of Adjusted Operating Expenses

2012€’000

2011€’000

Adjusted operating expenses 181,291 118,086

Revenue-driven costs 36,215 25,091

Adjusted operating expenses excluding revenue driven costs 145,076 92,995

Employee-related costs 99,868 68.8% 64,309 69.2%

Administration and office costs 15,484 10.7% 11,872 12.7%

Travel, exhibition and marketing costs 6,775 4.7% 4,730 5.1%

Cost of service 11,720 8.1% 4,266 4.6%

Other operational costs 11,229 7.7% 7,818 6.4%

Adjusted EBITDA

2012€000

2011€000

EBITDA 181,723 116,818



Admission to premium listing on the main market 2,098 –

One-off legal costs relating to litigation with William Hill – 1,389

Professional expenses on acquisitions 496 1,488

Adjusted EBITDA 186,720 124,924

Adjusted EBITDA margin 51% 51%

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In 2012, cost of service increased to €11.7 million (2011: €4.3 million) due primarily to the PTTS acquisition undertaken in 2011 and the social and real money gaming software license entered into in June 2012.

After excluding the impact of acquisitions in 2011 and 2012, adjusted operating expenses were 25% higher, mainly due to increased employee-related costs as the Group invested in its operations. As the market is seeing a very strong trend towards mobile, Playtech has invested further resources into this channel across all product verticals. Playtech has also secured its position in the social gaming market, by signing a software license agreement with Skywind Holdings, providing the Company with a wide range of both social gaming software and real money software, primarily focused on the rapidly expanding social gaming market and strengthening the Company’s mobile gaming product range respectively.

Financial Income and TaxFinancial income was €4.1 million (2011: €4.0 million), €3.6 million of which was received as a dividend from the investment in Asian Logic Limited (2011: €3.1 million). Financial expenses comprise €44.2 million (2011: €6.1 million) relating to the movement in deferred and contingent consideration, mainly affected by the recognition of approximately €39.8 million as a result of the deferred consideration of PTTS and the continued strong performance and related triggering of the acceleration payment.

The Group is tax registered, managed and controlled from the Isle of Man, where the corporate tax rate is set at zero. The Group’s subsidiaries are located in other jurisdictions and operate on a cost plus basis, and are taxed on their residual profit.

The tax charge in 2012 was €2.1 million (2011: €1.0 million, net of a credit correction to previous years of €0.6 million). The effective rate, excluding the exceptional finance costs on the movement in consideration to PTTS, was 1.7% (2011: 1.9%).

Net Profit and Earnings Per ShareReported net profit for the year attributable to owners of the parent increased by 12% to €86.8 million (2011: €77.7 million) and includes certain cash and non-cash costs relating to current and historic acquisitions and fair value adjustments to investments. A significant adjustment made during the year was the recognition of €39.8 million of finance costs in respect of the movement in fair value of contingent consideration relating to the acquisition of PTTS, which fulfilled the conditions relating to the acceleration of the additional consideration earlier than originally expected. In accordance with IFRS 3 revised, the increase in fair value due to the acceleration of the payment is charged to the income statement rather than capitalised as an increase in the cost of acquisition. In addition, there was a €4.0 million change in fair value relating to the acquisition of Mobenga.

Reported EPS for the year was 30.0 € cents based on a weighted average number of shares of 289.5 million (2011: 31.8 € cents, 244.1 million shares). Diluted EPS for the year was 29.4 € cents, based on a weighted average number of shares of 294.7 million (2011: 31.4 € cents, 247.2 million shares). The growth rates of EPS and diluted EPS were lower than the growth rate of the net profit due to the full year effect on the weighted average number of shares of the £100 million share placement of 46.5 million shares undertaken in December 2011.

Total amortisation in 2012 was €35.6 million (2011: €23.8 million). Amortisation on acquisitions of €26.7 million (2011: €15.8 million) is comprised of amounts relating to Tribeca (€3.2 million), Virtue Fusion (€3.3 million), GTS (€1.4 million), PTTS (€16.5 million), Ash Gaming (€1.3 million) and other acquisitions (€1.0 million). Of the remaining €8.9 million (2011: €7.9 million), €6.8 million (2011: €5.8 million) was from internally generated development costs and €2.1 million (2011: €2.1 million) related to other intangibles.

Acquisition of Geneity LimitedOn 23 January 2012, the Group acquired 100% of the shares of Geneity Limited, a provider of e-gaming software products, focused primarily on the sportsbook and lottery sectors. The Group paid an initial cash consideration of €15.1 million (£11.4 million), including working capital adjustments, €4.7 million (£4.0 million) which is held in escrow for 30 months. A further €4.7 million (£4.0 million) was also held in escrow and to be released subject to certain agreed deliverables being met. These deliverables were met in September 2012, and the funds were released.

Acquisition of Businesses and Assets of PTTS Completed in July 2011On 1 July 2011 the Group acquired 100% of the issued share capital of 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. The initial cash consideration for the acquisition was €140 million (subject to working capital adjustment) deferred over a period of two years, and an additional performance related consideration, capped at €140 million payable to the extent that the adjusted EBITDA of PTTS exceeded certain targets. During the first half of 2012, Playtech entered into an agreement to aggregate the outstanding balance of the Initial Consideration into one payment of €76 million, which reflects both a nominal discount of €4.2 million and also an effective discount to the net present value of the outstanding balance using the Group’s actual borrowing rate. The Group has utilised part of its available banking facilities in order to finance the payment of the discounted initial consideration.


173.12010

2011

2012

243.6

368.1

Financial Review (continued)

Business Review

PTTS’s continued strong performance in 2012 has, under the terms of the acquisition, triggered the accelerated payment of the entire contingent consideration of €140 million. The acceleration has occurred following the achievement of an annualised adjusted EBITDA in excess of €40 million in the first two quarters of 2012, which represents an approximate 100% increase in its adjusted EBITDA run rate since completion of the acquisition. This has resulted in the immediate recognition of approximately €34 million as finance cost charged to the consolidated statement of comprehensive income.

The increase in PTTS adjusted EBITDA in 2012 was significantly contributed from the Asian marketing agreement entered into in the beginning of 2012, and combined with the organic growth since acquired, has resulted in approximate 100% increase in its adjusted EBITDA run rate since completion of the acquisition in July 2011.

License Agreement with Skywind Holdings LimitedOn 11 June 2012, Playtech entered into a license agreement with Skywind Holdings Limited (“Skywind”), to provide the Group with a wide range of social and real money gaming software, which will enable the Group to gain access to and offer its licensees a broad range of social gaming platforms and products and complementary real money products. Apart from the ability to sell-on the products, the license agreement also provides Playtech access to more than 150 developers whose primary focus is on social and real money gaming. The consideration payable for the license is a combination of a fixed consideration of €0.5 million per month and a royalty fee of 20% payable on revenue generated from the social

gaming assets only. In the fourth quarter of 2012, the Group commenced generating revenues from licensing real money iOS mobile originally licensed through Skywind.

Cash FlowAs repeated in the past, Playtech continues to be a highly cash generative business. Cash as at 31 December 2012 was €120.9 million (31 December 2011: €164.8 million), representing 15% (2011: 21%) of the Group’s total assets. The decrease in the year end cash balance is due mainly to acquisition payments, including €118.0 million in respect of the PTTS early payment of initial consideration and payment due to accelerated contingent consideration noted above. Dividends of €70.4 million were paid during the year (2011: €23.4 million).

In the year ended 31 December 2012, the Group generated €112.8 million from operating activities (2011: €74.4 million). In addition it received €47.3 million (2011: €35.1 million) of dividends from William Hill Online, together representing a cash conversion rate from adjusted EBITDA of 88% (2011: 88%).

The Group’s cash outflow from investing activities (excluding the dividends received from William Hill Online) was €176.3 million (2011: €135.1 million), consisting of mostly acquisition payments of €143.1 million (2011: €97.2 million), of which €76.0 million related to the early payment of the initial consideration for PTTS, €42.0 million paid as the first instalment of the PTTS accelerated contingent consideration and €25.1 million for new acquisitions in 2012.

Cash outflow from financing activities was €27.8 million (2011: €122.0 million), comprising €70.4 million (2011: €23.4 million) paid in dividends during the year, €47.9 million as the final

dividend for 2011 and €22.5 million as interim dividend for 2012 and the repayment of the borrowings for the acquisition of Ash Gaming in December 2011 of €27.5 million and the partial repayment of the borrowing for the early payment of PTTS initial consideration of €6.3 million, offset by funds withdrawn from credit facility of €75.0 million.

Balance SheetThe Group held cash balances of €120.9 million (2011: €164.8 million) that included monies held on behalf of operators in respect of operator’s jackpot games and poker operations in the amount of €32.0 million (2011: €36.3 million). Trade receivables were €47.8 million (2011: €30.9 million) mostly in respect of December licensee fees principally paid one month after invoicing and increased as a result of acquisitions, mainly PTTS.

Intangible assets as at 31 December 2012 were €372.4 million (2011: €365.2 million), the majority of which comprised assets acquired from PTTS (€201.1 million), together with assets acquired and related goodwill from the acquisitions of Tribeca, GTS, VF, IGS, Mobenga, Ash Gaming, Geneity and JuegoOnline, patent and intellectual property rights and development costs of new games and products.

Available for sale investments were €35.3 million (2011: €12.4 million) comprising of holdings in Sportech plc, AsianLogic and PhilWeb.

Investments in equity-accounted associates were €156.0 million (2011: €163.0 million), of which €150.7 million (2011: €156.6 million) related to the investment in William Hill Online.

Gross Income by Product (€ millions)

Casino Bingo OtherVideobet WHOServices Poker

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Revenue-driven costs 36.2 20%

Employee related costs 99.9 55%

Administration and office costs 15.5 9%

Travel, exhibitions & marketing 6.8 4%

Cost of services 11.7 6%

Other 11.2 6%

181.3 100%

Long and short-term deferred consideration balances of €96.5 million (2011: €75.3 million) relates principally to the present value of the accelerated contingent consideration of PTTS. The prior year balance included the fair value of the PTTS initial consideration, which was fully settled in the beginning of the year.

Long and short-term contingent consideration of €16.8 million (2011: €111.9 million) represents the fair value of the contingent consideration that may become due for investments in Mobenga and IGS. The prior year balance related mainly to PTTS. This was converted to deferred consideration in June as explained above.

Post Balance Sheet EventsOn 1 March 2013, Playtech was informed by the board of William Hill that it intended to exercise its call option to acquire Playtech’s 29% stake in William Hill Online for a total consideration of approximately £424 million. In December 2008 when William Hill Online was formed, Playtech injected assets then worth €177.7 million into the joint venture. Since then, until 31 December 2012, Playtech’s share of profit has been €140.0 million. As a result, ignoring the software royalties generated, William Hill Online has delivered a cash return to Playtech greater than 3.5 times its original investment in the four years since inception of the joint venture.

Until completion, Playtech will continue to be entitled to a proportionate share of the FY2013 profits of William Hill Online and will continue to receive software royalties for the foreseeable future.

Dividend In October the Group paid an interim dividend for 2012 of €22.5 million, representing 7.8 € cents per share. The Board has recommended a final dividend of 15.4 € cents per share, giving a total 2012 dividend of 23.2 € cents per share (2011: 16.5 € cents per share), an increase of 41%, reflecting the Board’s confidence in the strong underlying growth in earnings, and the Company’s dividend policy of paying out 40% of adjusted net earnings. This would represent a payment of €44.8 million.

Ron HoffmanChief Financial Officer14 March 2013

Analysis of Costs and Expenses (€ millions) Adjusted Operating Expenses FY2012 (excluding depreciation and amortisation)


Governance

Board of Directors

The current Board of Directors consists of:

Roger Withers (aged 70)Non-Executive ChairmanRoger started his career with Booz, Allen & Hamilton as an international management consultant and, subsequently, has over 30 years experience in the leisure and gaming industries. In 1973, Roger joined Ladbrokes where he held a number of senior positions in the bookmaking, casino, lottery and gaming machine divisions. In 1986, he joined Bass where his roles included managing director of BMLS and Coral Racing and executive chairman of Bass Leisure, South Africa. He retired from Bass in 1998. Since then, he has held a number of other non-executive directorships, including chairman of Arena Leisure plc as well as with a number of substantial privately held companies in the property, technology, publishing and exhibitions sectors. He is also currently a non-executive chairman of Sportech plc, the pools and tote betting company.

Mor Weizer (aged 37)Chief Executive Officer Mor was appointed as the Group’s Chief Executive Officer in May 2007. Prior to this he was the chief executive officer of one of the Group’s subsidiaries, Techplay Marketing Ltd which required him to oversee the Group’s licensee relationship management, product management for new licensees and the Group’s marketing activities. Prior to joining the Playtech Group, Mor worked for Oracle for over four years, initially as a development consultant and then as a product manager, which involved creating sales and consulting channels on behalf of Oracle Israel and Oracle Europe, the Middle East and Africa. Before this, he worked in a variety of roles, including as an auditor and financial consultant for PricewaterhouseCoopers and a system analyst for Tadiran Electronic Systems Limited, an Israeli company that designs electronic warfare systems. Mor is also a non-executive director of Sportech PLC.

Ron Hoffman (aged 36)Chief Financial OfficerRon was appointed as the Group’s Chief Financial Officer following the retirement of David Mathewson on 31 December 2012, having joined the Group in 2004. He spent the last eight years at Playtech as VP of Finance, managing the finance department, including its listing on AIM in 2006, the transition to the Main Market in 2012 and supporting the growth of the business through its operations, financial planning and reporting. Prior to joining the Playtech Group, Ron previously held the position of Senior Manager at Ernst & Young.

Alan Jackson (aged 69)Senior Non-Executive DirectorAlan has over 30 years experience in the leisure industry. From 1973 to 1991, he occupied a number of positions at Whitbread, principally as managing director of Beefeater steakhouse and also the Whitbread restaurant division where he was responsible for the creation and development of the Beefeater, Travel Inn and TGI Friday brands. In 1991, he founded Inn Business Group plc, which was acquired by Punch Taverns plc in 1999. He has been chairman of The Restaurant Group plc since 2001. He is also chairman of Charles Wells Limited and deputy chairman and senior non-executive director at Redrow plc.

Andrew Thomas (aged 69)Non-Executive DirectorAndrew has enjoyed a career as an accountant and businessman, much of which within in the leisure industry. Andrew is currently chairman of Randalls Limited, a family-owned pub company in Jersey, where he has his home. Andrew previously served as chairman of the The Greenalls Group PLC and as a non-executive director of JJB Sports PLC and of The Restaurant Group PLC, as well as serving on the boards of a number of private and public companies. He is the founding partner in the Cheshire-based accountant firm, Moors Andrew Thomas & Co. LLP. Andrew is a member of the Institute of Chartered Accountants in England & Wales and a member of the Institute of Taxation.

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Roger Withers Non-Executive Chairman

Mor Weizer Chief Executive Officer

Ron Hoffman Chief Financial Officer

Andrew Thomas Non-Executive Director

Alan Jackson Senior Non-Executive Director


The directors are pleased to present to shareholders their report and the audited financial statements for the year ended 31 December 2012.

Principal Activities and Business ReviewThe Group’s principal activities are the development and licensing of software and the provision of ancillary services for the online and land-based gaming industries. Playtech Limited is a public listed company, listed on the London Stock Exchange; it is incorporated and domiciled in the Isle of Man.

The information that fulfils the requirement for a management report as required by Rule 4.1.5 of the Disclosure and Transparency Rules applicable to the Company can be found in the Chairman’s statement and the Business Review on pages 2 to 27, which also includes an analysis, using financial key performance indicators, of the development, performance and position of the Company’s business. A statement of the key risks and uncertainties facing the business of the Company at the end of the year is found on pages 48 and 49 of this report and accounts, and details of the Company’s risk management objectives and policies are set out in Note 30 to of the Financial Statements.

Details of all important post-balance sheet events affecting the Company and its subsidiaries are set out in Note 31 to the Financial Statements.

ResultsThe results of the Company and the Group for the year ended 31 December 2012 are set out on pages 58 to 97 show total gross income (total revenue plus the Group’s share of profits in William Hill Online before non cash amortisation of intangibles) of €368.1 million (2011: €243.6 million) and a net profit after tax of €86.8 million (2011: € 77.7 million).

DividendsThe Board has recommended the payment of a final dividend for the year ended 31 December 2012 of 15.4 € cents per share which will be paid to shareholders on the register as at 26 April 2013. The payment of this dividend requires shareholder approval which will be sought at the Company’s Annual General Meeting to be held at the Sefton Hotel, Loch Promenade, Douglas, Isle of Man on 8 May 2013. If approved, the final dividend will be paid on 24 May 2013, and together with the interim dividend of 7.8€ cents per share paid on 19 October 2012 makes a total dividend of 23.2€ cents per share for the year.

Shareholders who wish to receive their dividends in a currency other than euros will be required to return currency election forms to the Company’s registrars by 3 May 2013.

Directors and Directors’ InterestsThe directors of the Company who held office during the 2012 year and to date are:

Appointed Resigned

Roger Withers 28.3.2006

Alan Jackson 28.3.2006

David Mathewson 10.6.2010 31.12.2012

Mor Weizer 2.5.2007

Andrew Thomas 19.6 2012

Ron Hoffman 1.1.2013

The interests of the directors who held office during 2012 and to date, in the share capital of the Company and details of their service agreements are shown in the Remuneration Committee report on pages 40 and 43. There are no agreements between the Company and any of its directors providing for compensation for loss of office that occurs because of a take-over bid.

Significant ShareholdingsAs of 14 March 2013 the Company had been advised of the following significant shareholders each holding more than 3% of the Company’s issued share capital:

Shareholders %*No. of ordinary

shares

Brickington Trading Limited 49.3 143,645,782

BlackRock Investment Management (Institutional Group) 5.4 15,699,402

Capital (Institutional Group) 4.9 14,311,675

Greenlight Capital 3.8 11,029,476

Fidelity (Institutional Group) 3.6 10,625,334

Interexpo Trading Limited 3.0 8,774,200

* Based on 291,137,964 ordinary shares in issue on 28 February 2013

Directors’ Report

Governance

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The persons set out in the table above have notified the Company pursuant to Rule 5 of the Disclosure and Transparency Rules of their interests in the ordinary share capital of the Company.

Capital StructureAs at 31 December 2012, the Company had 290,236,870 issued shares of no par value. The Company has one class of ordinary shares and each share carries the right to one vote at general meetings of the Company and to participate in any dividends declared in accordance with the articles of association. No person has any special rights of control over the Company’s share capital.

The authorities under the Company’s articles of association granted at the last Annual General Meeting for the Company to purchase its own shares and for the Directors to issue new shares for cash remains valid until the forthcoming Annual General Meeting when it is intended that a resolution will be put forward to shareholders to renew the authority to issue shares for cash. The Company did not acquire any of its shares during the year.

The Company’s articles of association do not contain any specific restrictions on the size or a shareholder’s holding or on the transfer of shares. There are no restrictions on amending the articles of association other than the requirement to pass a special resolution of the shareholders.

Significant AgreementsThere are no agreements or arrangements to which the Company is a party that are affected by a change in control of the Company following a take-over bid, and which are considered individually significant in terms of their impact on the business of the Group as a whole, other than the Company’s €50 million facility from Bank Hapoalim B.M. which provides that the outstanding facilities may become immediately due and payable on the occurrence of a change in control.

Related Party TransactionsDetails of all related party transactions are set out in Note 28 to the Financial Statements.

Corporate GovernanceThe Directors’ statement on Corporate Governance is set out on pages 33 to 36 and forms part of this report.

Political and Charitable DonationsThe Company made a charitable donation of £30,000 to the Responsible Gaming Trust (formerly the Great Foundation), a charity which funds the research into and treatment of problem gambling during the year ended 31 December 2012, and made further donations to a variety of charities operating in countries in which the Company’s subsidiaries are based.

The Company made no political donations during this period.

EmployeesThe Corporate Social Responsibility Report provides information with respect to the Group’s impact on the environment and can be found on pages 50 to 55. Applications for employment by disabled persons are always fully and fairly considered, bearing in mind the aptitude and ability of the applicant concerned. The Group places considerable value on the involvement of its employees and has continued to keep them informed of matters affecting them as employees and on the performance of the Group.

Policy on CreditorsThe Group and Company do not follow any code or standard on payment practices and there is no fixed policy for payment for goods and services, though generally terms of payment are agreed when commencing trading and, subject to any genuine dispute, the policy is to adhere to such payment terms. Payment is made promptly once authorisation of the invoice is obtained.

Land and BuildingsThe directors are of the opinion that there is no significant difference between the book and market value of the land and buildings owned by the Group.

Future ProspectsThe Board is confident of its performance for 2013. Its aim in 2013 is to further enhance Playtech’s market leading position with a focus on regulated markets and using its strong cash position, if appropriate, to look at the acquisition of complementary businesses.

Directors’ Statement Pursuant to the Disclosure and Transparency RulesEach of the Directors, whose names and functions are listed in the Board of Directors section on pages 28 and 29 confirm that, to the best of their knowledge:

• The Group and Company Financial Statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

• The Directors’ Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.

Annual General Meeting (AGM)The 2012 AGM was held in May in Douglas, Isle of Man. All directors were present, and made themselves available to answer questions from shareholders. The AGM provides an opportunity for the directors to communicate personally performance and future strategy to non-institutional shareholders and for those shareholders to meet with and question the board. All directors again plan to be present. All results of proxy votes are read out, made available for review at the meeting, recorded in the minutes of the meeting and communicated to the market and via the Group website.

The 2013 AGM will be held at the Sefton Hotel, Loch Promenade, Douglas, Isle of Man, IM1 2RW on Wednesday 8 May 2013 at 11:30am. The notice convening the 2013 AGM, and an explanation of the items of non-routine business are set out in the circular that accompanies this Annual Report.


AuditorsSo far as each director is aware, at the date of the approval of the Financial Statements there is no relevant audit information of which the Company’s auditors are unaware. Each director has taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

A resolution to reappoint BDO LLP as the Company’s auditors will be submitted to the shareholders at the Annual General Meeting.

Approved by the Board and signed on behalf of the Board

Paul WrightCompany Secretary and Legal Counsel14 March 2013

Directors’ Report (continued)

Governance

Overview

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Dear Shareholder

I am pleased on behalf of the Board to present the Company’s Corporate Governance Report to shareholders.

IntroductionThe purpose of corporate governance is to ensure that companies protect the sustainability of their businesses and the communities in which they operate, while maximising shareholder value and treating all shareholders fairly. The Board recognises that high standards of corporate governance have become a necessary condition for sustainable success in business. The Board is committed to high standards of corporate governance which it considers to be central to the effective stewardship of the business and to maintaining the confidence of stakeholders.

While the Company’s shares were traded on AIM, the Board was not required to follow the UK Corporate Governance Code (the “Code”) although it did take account of a number of its principles to the extent it was deemed appropriate for a young, entrepreneurial company operating in a rapidly changing environment. However, with a view to the Company’s development and following its graduation from AIM to the premium segment of the official list of the UKLA in July 2012 (“Admission”), Playtech is required to follow the provisions of the Code, and the Board has sought to move towards full compliance with it.

The directors have considered the contents and requirements of the Code as it applies to the Company reporting on its financial year ended 31 December 2012 and believe that, since Admission, the Company has been fully compliant with the Code for the remainder of the financial year. However, the Company recognises that there were some areas of non-compliance which occurred during the financial year prior to Admission (i.e. while the Company was on AIM) as follows:

• As disclosed on page 42, until 2 May 2012, the Chairman, Roger Withers held options over a total of 300,000 ordinary shares of the Company, some of which were granted to him shortly after the Company’s admission to AIM in 2006 and so he could not be considered to be fully independent on appointment (provision A.3.1 of the Code). These option arrangements were terminated prior to Admission and Mr Withers is now considered to be fully independent.

• Until the appointment of Andrew Thomas as a non-executive director on 19 June 2012, the Board, the audit committee and the remuneration committee did not consist of at least two independent non-executive directors (excluding the Chairman) (provisions B.1.2, C.3.1 and D.2.1 of the Code), and the nomination committee was not made up of a majority of independent non-executive directors (excluding the Chairman) (provision B.2.1 of the Code). However, since Mr Thomas’ appointment, Playtech has complied with those provisions of the Code for the remainder of the financial year.

• As disclosed on page 39, certain historic option awards made to executive directors (all of which were made while the Company was on AIM) do not contain any performance-related vesting conditions. The current policy of the remuneration committee as stated in its report on page 39 is that vesting of all awards to directors and senior management should be dependent on the achievement of challenging performance criteria reflecting Playtech’s objectives, including non-financial performance metrics where appropriate to align with the interests of shareholders generally.

• For the financial year, the Company has been regarded as a ‘smaller company’ for the purposes of the Code. Prior to the end of the financial year, the Company graduated to the FTSE 250 and, therefore, will not be treated as a smaller company for its financial year ending 31 December 2013.

The Board is accountable to the Company’s shareholders for good governance and the statement set out below describes how the Group applies the principles identified in the Code.

The Board Constitution and ProceduresCompositionThe composition of the current Board of Directors and biographical information concerning them is given on pages 28 to 29.

As at 31 December 2012, the Board comprised the Chairman, the Chief Executive Officer, the Chief Financial Officer, together with two independent non-executive directors. The list of directors holding office during the year to 31 December 2012 and the committees on which they served are set out in the table below.

Position IndependentRemuneration

Committee Audit CommitteeRisk & Compliance

CommitteeNominations

Committee

Executive directors

Mor Weizer CEO

David Mathewson CFO

Non-executive directors

Roger Withers Chairman ✓* ✓ ✓ ✓ Chairman

Alan Jackson Senior Non-executive Director ✓ Chairman ✓ Chairman ✓

Andrew Thomas Non-executive ✓ ✓ Chairman ✓ ✓

* With effect from 3 May 2012.

All of the directors served throughout the financial year, with the exception of David Mathewson who resigned on 31 December 2012 and was formerly the Chief Finance Officer and Andrew Thomas who was appointed on 19 June 2012. Ron Hoffman was appointed to the Board with effect from 1 January 2013 on the retirement of David Mathewson.

Corporate Governance

Governance


The non-executive directors are all considered by the Board to be independent of management and free of any relationship, which could materially interfere with the exercise of their independent judgment.

The Company Secretary & Legal Counsel acts as secretary to the Board and its committees and his appointment and removal is a matter for the Board as a whole. The Company Secretary is a member of Group’s senior management team and all the directors have access to his advice and services.

Board OperationThe roles of the Chairman (Roger Withers) and the Chief Executive Officer (Mor Weizer) are separated, clearly defined and their respective responsibilities are summarised below.

Chairman• Overall effectiveness of the running of the Board;• Ensuring the Board as a whole plays a full part in the development and determination of the Group’s strategic objectives;• Keeping the other directors informed of shareholders attitudes towards the Company;• Safeguarding the good reputation of the Company and representing it both externally and internally;• Acting as the guardian of the Board’s decision-making processes; and• Promoting the highest standards of integrity, probity and corporate governance throughout the Company and particularly at Board level.

Chief Executive Officer• Executive leadership of the Company’s business on a day-to-day basis;• Developing the overall commercial objectives of the Group and proposing and developing the strategy of the Group in conjunction with the

Board as a whole;• Responsibility, together with his senior management team, for the execution of the Group’s strategy and implementation of Board decisions;• Recommendations on senior appointments and development of the management team; and• Ensuring that the affairs of the Group are conducted with the highest standards of integrity, probity and corporate governance.

How the Board FunctionsIn accordance with the Code, the Board is collectively responsible for the long-term success of the Company. The Board provides entrepreneurial leadership for the Company within a framework of prudent and effective controls which enables risk to be assessed and managed. The Board sets the Company’s strategic aims, and ensures that the necessary resources are in place for the Company to meet its objectives and reviews management performance.

The Board meets regularly and frequently, with 10 meetings scheduled and held in 2012. It was also necessary for the Board to hold an unscheduled Board meeting in the year in connection with the re-domicile of the Company to the Isle of Man and the issue of a prospectus in connection with Admission.

During the year, the Chairman met the other non-executives in the absence of the executive directors to re-confirm and take account of their views. All the non-executive directors have sufficient time to fulfil their commitments to the Company.

Board meetings are held at the registered office of the Company on the Isle of Man, though occasional meetings are held at the Group’s operations or at other locations. Directors are provided with comprehensive background information for each meeting and all directors were available to participate fully and on an informed basis in the Board decisions. In addition, certain members of the senior management team including the COO, the Group General Counsel and the Head of Investor Relations are invited to attend the whole or parts of the meetings to deliver their reports on the business. Any specific actions arising during meetings are agreed by the Board and a comprehensive follow-up procedure ensures their completion.Details of the attendance of the directors at meetings of the Board and its committees are set out in the table below.

Board Audit Remuneration Nomination Risk

Number of Meetings 11 2 6 2 2

Roger Withers 11 2 5 2 1

Alan Jackson 10 2 6 2 2

Mor Weizer 11

Andrew Thomas 6 1 4 2

David Mathewson 9

Responsibility and DelegationThe Chairman is primarily responsible for the efficient functioning of the Board. He ensures that all directors receive sufficient relevant information on financial, business and corporate issues prior to meetings. The Chief Executive Officer’s responsibilities focus on coordinating the Group’s business and implementing Group strategy. Regular interaction between the Chairman and Chief Executive Officer between meetings ensures the Board remains fully informed of developments in the business at all times.

Corporate Governance (continued)

Governance

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There remains in place a formal schedule of matters specifically reserved for Board consideration and approval, which includes the matters set out below:

• Approval of the Group’s long-term objectives and commercial strategy;• Approval of the annual operating and capital expenditure budgets and any changes to them;• Major investments or capital projects;• The extension of the Group’s activities into any new business or geographic areas, or to cease any material operations;• Changes in the Company’s capital structure or management and control structure;• Approval of the annual report and accounts, preliminary and half-yearly financial statements, interim management statements and announcements

regarding dividends;• Approval of treasury policies, including foreign currency exposures and use of financial derivatives;• Ensuring the maintenance of a sound system of internal control and risk management;• The entering into of agreements that are not in the ordinary course of business or material strategically or by reason of their size;• Changes to the size, composition or structure of the Board and its committees; and• Corporate governance matters.

In addition, the Board has adopted a formal delegation of authorities’ memorandum which sets out levels of authority for employees in the business.

The Board has delegated certain of its responsibilities to committees of the Board. These committees currently are the Audit Committee, the Remuneration Committee, the Risk & Compliance Committee and the Nomination Committee. The composition of these committees is set out in the table on page 33 and each committee reports separately on its work in the following pages. The minutes of each committee are circulated to and reviewed by the Board. The Company Secretary is secretary to each of the committees. The Terms of Reference for each of the committees are available to view on the Company’s website www.playtech.com.

Board TenureIn accordance with the articles of association, every new director appointed in the year is required to stand for re-election by shareholders at the AGM next following their appointment. Accordingly, Andrew Thomas and Ron Hoffman will stand for re-election at this year’s AGM. For those not subject to this obligation, the Board has decided to comply with the Code requirements that directors of companies in the FTSE350 Index submit themselves for re-election annually. Accordingly, all the directors are seeking their re-appointment at the 2013 AGM.

The Board has collectively agreed that the directors proposed for re-election in 2013 have made significant contributions to the business since their appointment their last re-election and each has a key role to play in the formulation of the Group’s future strategy.

Insurance and IndemnityIn accordance with Article 162 of the Company’s articles of association, and subject to the provisions of the Isle of Man Companies Act 2006, the directors and officers of the Company are entitled to an indemnity from the Company against liabilities incurred by them in the actual or purported exercise of their duties, or exercise of their powers including liability incurred in defending any proceedings (whether civil or criminal) which relate to anything done or omitted to be done and in which judgment is given in his favour, or in which he is acquitted, or which are otherwise disposed of.

In addition, the Company has purchased and maintained directors’ and officers’ liability insurance cover against certain legal liabilities and costs for claims incurred in respect of any act or omission in the execution of their duties and which has been in place throughout the year.

In certain circumstances, directors are entitled to seek independent professional advice under an agreed board procedure, which would then be organised by the Company Secretary & Legal Counsel, and in this regard the Company would meet their reasonable legal expenses.

Board EffectivenessBoard BalanceThe Board comprises individuals with wide business experience gained in various industry sectors related to the Company’s business and it is the intention of the Board to ensure that the balance of the directors reflects the changing needs of the Group’s business. The Board considers that it is of a size and has the balance of skills, knowledge, experience and independence that is appropriate for the Company’s business. While not having a specific policy regarding the constitution and balance of the Board, potential new directors are considered on their own merits with regards to their skills, knowledge, experience and credentials. Female candidates or candidates from any particular ethnic or national background would each be considered equally.

The non-executive directors continue to contribute their considerable collective experience and wide-ranging skills to the Board and provide a valuable independent perspective; where necessary constructively challenging proposals, policy and practices of executive management. In addition, they helped formulate the Group’s strategy.

EvaluationThe Board is committed to an ongoing evaluation process of itself and its committees to assess their performance and identify areas in which their effectiveness, policies and processes might be enhanced. The Chairman and the Chief Executive Officer, in discussion with the Senior Non-Executive Director, intend to undertake a review of the performance of individual directors. The Senior Non-Executive Director will consider the performance of the Chairman, taking into account the views of the executive directors.

Newly-appointed directors can expect a detailed and systematic induction on joining the Board. They meet various members of senior management and familiarise themselves with all core aspects of the Group’s operations. On request, meetings can be arranged with the major shareholders. In 2012, following his appointment, visits were arranged for Andrew Thomas to the Group’s offices in Estonia, Israel and Cyprus to better understand the operations and financial controls of the Group.


Relationship with ShareholdersPrimary responsibility for effective communication with shareholders lies with the Chairman, but all the Company’s directors are available to meet with shareholders throughout the year. In particular the Chief Executive Officer and Chief Financial Officer prepare a general presentation for analysts and institutional shareholders following the interim and preliminary announcements. Further presentations are also prepared following significant acquisitions and whenever the Board considers it beneficial to shareholders to do so. Regular meetings with shareholders and potential shareholders are also held by the Head of Investor Relations.

The Company endeavours to answer all queries raised by shareholders promptly.

The Company’s largest shareholder is Brickington Trading Limited (“Brickington”). Brickington is a wholly owned subsidiary of a trust, one of the ultimate beneficiaries of which is Teddy Sagi, one of the Group’s founders. In connection with the Company’s Admission, the Company and Brickington have entered into a relationship agreement, pursuant to which Brickington has agreed that: (i) it will vote its shares in such a manner so as to procure that each member of the Group is capable of carrying on its business independently of Brickington and its associates; and (ii) it will not exercise any of the voting rights attaching to its shares in such a manner so as to procure any amendment to the articles of association which would be inconsistent with, undermine or breach any of the provisions of the relationship agreement. Brickington has also agreed that all transactions and relationships between it (or any of its associates) and the Company will be on arm’s length terms and on a normal commercial basis. The Board believes that the provisions of the relationship agreement provides reassurance that Brickington will not seek to exercise its shareholding capriciously and the independence of the Company.

In connection with the relationship agreement mentioned above, Mr. Sagi has entered into an agreement with the Company pursuant to which Mr. Sagi will, as and when requested to do so by the Company, provide advisory services to the Company for a nominal fee of €1.00 per annum until either Mr. Sagi ceases to be interested (whether legally or beneficially) in any ordinary shares or either party terminates the agreement following its fifth anniversary, whichever is the earlier. The Company has not sought any advisory services under these arrangements during the year.

Shareholders are encouraged to participate in the Annual General Meeting at which the Chairman will present the key highlights of the Group’s performance. The Board will be available at the Annual General Meeting to answer questions from shareholders.

Investor Relations (IR) and CommunicationsThe Company has well-established IR processes, which support a structured programme of communications with existing and potential investors and analysts. Executive directors and members of the IR team participated in a number of investor events, attending industry conferences and regularly meet or are in contact with existing and potential institutional investors from around the world, ensuring that Group performance and strategy is effectively communicated, within regulatory constraints. Other representatives of the Board and senior management meet with investors from time to time. The IR team provides regular reports to the board on related matters, issues of concern to investors, and analyst’s views and opinions.

Whenever required, the executive directors and the Chairman communicate with the Company’s brokers to confirm shareholder sentiment and to consult on governance issues.

During 2012, 36 regulatory announcements were released informing the market of acquisitions, corporate actions, important customer contracts, financial results, the results of annual general meetings and Board changes. Copies of these announcements, together with other IR information and documents, are available on the Group website www.playtech.com.

SummaryIn presenting this report, and having monitored, reviewed or approved all shareholder communications in 2012 and since the end of the financial year, the Board is confident that it has presented a balanced and understandable assessment of the Company’s position and prospects.

By order of the Board

Roger WithersChairman14 March 2013

Corporate Governance (continued)

Governance

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Dear Shareholder

I am pleased to present the directors’ remuneration report for the year to 31 December 2012 to shareholders on behalf of the Board.

This report, as required by the UK Corporate Governance Code introduced by the Financial Reporting Council in June 2010 (the “Code”), describes how the Board has applied the principle of the Code to director’s remuneration. While Playtech, as a company incorporated in the Isle of Man, is not required to comply with the requirements set out in Part 15 of the UK Companies Act 2006 and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (“2008 Regulations”), the Board has sought to do so in all material respects in this report. In addition, consistent with the draft proposals on directors’ pay published by the Department for Business, Innovation & Skills, the report has been split into two sections: a Remuneration Policy Report, which sets out the policy on the remuneration of the executive and non-executive directors and an Implementation Report, which discloses how the current remuneration policy has been implemented in the year ended 31 December 2012.

This has been an important year in the development of Playtech, with the move from the AIM to a premium listing on the London Stock Exchange, and significant growth in the revenues and adjusted EBITDA of the Group, which have been achieved through the efforts of a talented leadership team.

For the Remuneration Committee, this has meant a major focus on ensuring appropriate remuneration practises are in place both to retain and develop our key talent and also, as our business expands, to attract new talent when required. Our policies are designed to reward and retain those key individuals who we hope are with us for a number of years as the Company develops further in new channels and markets.

Our remuneration policy, which is set out in more detail in the report, is designed to reward the contributions of senior management but also to incentivise them to maintain Playtech’s position as the software and services provider of choice to the gaming sector. Accordingly, remuneration is delivered via modest fixed remuneration delivered via salary and benefits, and incentive-based remuneration enabling the executives to be rewarded for delivering superior financial performance and returns to shareholder. The committee believes these measures reinforce the Company’s strategy to create a business with significant scale and a full product and service capability, underpinned by a pre-eminent technology platform.

During the year, and prior to the transfer to a premium listing, the committee undertook a review of the suitability of the Company’s existing share option plan. Following this review it was decided that the Company should adopt a new long-term incentive plan with the necessary flexibility to deliver longer-term incentive arrangements for executive directors and senior managers that would reward them appropriately for growth in key performance metrics, such as adjusted EBITDA or Earnings per share, and provide a strong retention tool that a traditional option plan dependent to some extent on fluctuations in the stock market generally, cannot provide. Accordingly, in March 2012 the Board, on the recommendation of the remuneration committee adopted the Playtech 2012 Long-Term Incentive Plan (“2012 Plan”) intended to largely replace the Playtech 2005 Global Share Option Plan (“Option Plan”).

One of the key features of the 2012 Plan is that it allows options to be either granted at nominal or nil cost and/or to be settled in cash, which greatly reduces the dilutive impact on existing shareholders generally of the issue of shares on the exercise of options. With this in mind, it was also agreed to amend the rules of the Option Plan to allow for the cash value of an award to be paid to a participant with their agreement when they exercise an option instead of the participant being issued with new shares and for him or her to realise the value by selling the shares in the market.

Further details of the Company’s remuneration policy and structure are provided in this report.

We believe that the remuneration policy and incentive framework currently in place is working well to support the Company’s strategy in the current economic environment, is helping to retain and motivate our management team and is helping to drive strong returns for our shareholders. A single advisory resolution will be put to shareholders at the annual general meeting on 8 May 2013 inviting them to approve the Remuneration Policy Report and the Implementation Report.

Remuneration Policy ReportThis part of the Remuneration Report has not been audited.The Company’s remuneration policy is designed to ensure that the Group has the ability to attract, retain and motivate individuals to ensure the continued success of the Company. Remuneration packages are designed to reward the executive directors and members of the senior management team fairly for their contributions, whilst remaining within the range of benefits offered by similar companies in the sector.

The committee believes that the individual contributions made by the executive directors and senior management are fundamental to the successful performance of the Company. The committee after discussion with the executive directors and its advisers, New Bridge Street, has therefore adopted a remuneration policy with the following objectives:

• Pay executives fairly, but recognising that they have highly marketable skills to companies already in (and those considering entry to) the online gaming industry, but acknowledge local market levels, and where appropriate, practices;

• Incentivise and reward behaviours that will contribute to superior Company performance;• Avoid the need to make ad hoc payments outside the formal structure;• Enable the Company to attract and retain international executives at the required calibre, particularly in potential new markets, such as the USA;• Be simple and understandable;• Provide good lock-in of key employees through deferred elements; and• Avoid reward for failure.

The committee believes that its remuneration policy creates a coherent and appropriate framework for remunerating executive directors and senior managers of the Company and draws a clearer link between performance and reward.

Remuneration Report

Governance


Remuneration Policy for Executive DirectorsAt a Glance

Element & MaximumPurpose and Link to Strategy Operation Maximum Performance Targets Changes for 2013

Salary To attract, retain and motivate high calibre individuals for the role and duties required

To provide market-competitive salary relative to the external market

To reflect appropriate skills, development and experience over time

Reviewed annually

Takes account of the external market and other relevant factors including internal relativities and individual performance

Other than when an executive changes roles or where benchmarking indicates individual salaries require realignment, annual increases will not exceed the general level of increases for the Group’s employees

N/A CEO’s current salary £450,000

CFO’s current salary £200,000

Bonus Clear and direct incentive linked to annual performance targets

Incentivise annual delivery of financial measures and personal performance

Corporate measures selected were consistent with and complemented the budget and strategic plan

Paid in cash 150% of salary for the CEO, 100% of salary for other executive directors

70% based on financial performance measures

30% based on personal performance

No change

Long-Term Incentive Plan

Aligned to key strategic objective of delivering strong returns to shareholders and earnings performance

Grant of performance shares

Shares generally settled unless use of shares would exceed the free float limit for inclusion in the FTSE 250 index in which case the gain is cash settled

Between 150% to 300% of salary performance shares

Performance measured over three years

Performance targets aligned with the Group’s strategy of delivering strong returns to shareholders and earnings performance

No change

Pension None N/A N/A N/A N/A

Other benefits To help attract and retain high calibre individuals

Provision of private medical, permanent health insurance and life insurance

N/A N/A No change

Remuneration Report (continued)

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New appointments: Base salary levels will be set to reflect the experience of the individual, appropriate market data and internal relativities. If it is considered appropriate to appoint a new director on a below market salary, they may be subject to a series of increases to a desired salary positioning over an appropriate time frame (e.g. up to two to three years) subject to performance in post. Normal policy will be for the new director to participate in the remuneration structure detailed above. The committee may consider it necessary to make an exceptional grant of shares in order to compensate the individual for awards that would be forfeited from the current employer or in order to secure the individual’s appointment. Where possible, such awards would be structured to mirror the form and structure of the forfeited awards or to provide alignment with existing shareholders.

Exits: Executive directors’ service contracts are terminable by six months notice from either the Company or the executive. The Company may also make a payment in lieu of notice equal to six months salary and benefits and any applicable statutory payments due to them. Executive directors may also receive a pro-rated annual bonus for the period worked in the financial year subject to performance. Standard ‘good leaver’ definitions are included in the 2012 Plan rules in relation to long-term incentives.

Remuneration Policy for Executive DirectorsSalary and Benefits in KindSalaries are reviewed annually for each executive director with effect from June each year. The committee takes into account individual performance and experience, the size and nature of the role, the relative performance of the Company, pay policy within the Company and salaries in comparable companies.

The current basic salary levels of the executive directors are:

• M. Weizer: £450,000• R. Hoffman: £200,000

Benefits include private medical insurance, permanent health insurance, and life insurance.

Annual BonusExecutive directors are eligible to participate in an annual bonus plan based on a combination of corporate financial goals and individual achievements. The maximum level of bonus that could have been awarded for the financial year 2012 was 150% of base salary for the CEO and 100% of base salary for the CFO. Any bonus payments are made in cash.

For 2013, bonuses for the executive directors will be based 70% on a financial performance measure, comprising adjusted EBITDA, with the remaining 30% being based on personal objectives.

The level of bonus payable by reference to the financial performance of the Company will be determined on a sliding scale based around the ‘target’ number, set by reference to the Company’s budget for the forthcoming financial year. The achievement of the target is not “all or nothing”, but instead would be on a sliding scale, with no bonus being paid until at least 90 per cent of target is achieved and rising on a straight line basis with the maximum paid out only if 120 per cent of target budget is achieved.

PensionsNone of the executive directors are members of any Company pension plans.

Long-Term IncentivesShare Option PlanThe Company operates an unapproved share option scheme in accordance with the Rules of the Playtech Limited 2005 Global Share Option Plan (the “Option Plan”), pursuant to which the senior management and where relevant, the Remuneration Committee, makes recommendation to the Board concerning the allocation of share options to employees of the Company. Options under the Option Plan are granted at market value and in the case of executive directors exclusively, and in most instances for senior managers, the options vest and become exercisable on the third anniversary of the relevant grant date. In limited instances options granted to senior managers vest in equal proportions on the first three anniversaries of the relevant grant date. Unexercised options expire ten years after the date of grant, unless the relevant employee leaves the Group’s employment, in which case the unvested options lapse and any vested options lapse three months after the date that the employment ends.

It is not intended that the Option Plan will be used for future share option grants for executive directors or for members of senior management.

Long-Term Incentive PlanGiven the dilutive effect of share options and the increasing disconnect between the financial performance of companies generally and the performance of their share prices in the current turbulent economic times, the Board decided in March 2012, after discussions with certain of its key shareholders and its advisers, New Bridge Street, to adopt a new long-term incentive plan, the Playtech Long Term Incentive Plan 2012.

Under the 2012 Plan, a range of share-based awards can be made to executive directors and senior managers of the Group, including conditional awards, nil-cost options, market value share options or forfeitable share awards. It is intended that initial awards to executive directors will be in the form of nil cost options and the face value of such awards will be 150% and 100% of salary for the CEO and CFO respectively.

Awards made to executive directors vest on the third anniversary of grant subject to (i) participants remaining in employment (other than in certain ‘good leaver’ circumstances) and (ii) achievement of challenging performance targets. Awards that are structured as options can be exercised up to ten years after the date of grant (or such shorter period in respect of vested options held by a leaver).


Exercise of any awards granted to executive directors under the 2012 Plan, will be subject to performance conditions. It is intended that the first awards under the plan will be subject to the achievement of a mixture of performance conditions based in part on total shareholder return relative to a comparator group and part in the growth in earnings per share over the period. The committee will determine the appropriate targets immediately prior to grant.

Awards made to the executive directors will also be subject to clawback provisions for a period of three years following vesting. The committee may decide to clawback awards in the event of misconduct or material misstatement of the Group’s financial results resulting in an award vesting to a greater degree than would otherwise have been granted.

Awards may be satisfied by the issue of new shares, market purchase shares or may be settled in cash subject to the tax treatment in the hands of the recipient.

Share Ownership GuidelineThe Board has recently adopted a policy that will require any executive director on exercise of an award under the 2012 Plan, to retain a portion of the net of tax vested shares until he has build-up and retain a shareholding roughly equivalent in value to one times his base salary.

Other Incentive SchemesIn December 2009, the Board approved the establishment of a phantom share plan for the senior executives of Video B Holdings Limited (“Videobet”), in order to retain and incentivise the management team. The overall size of the plan is limited to an amount equal to 2.5 per cent of the share capital of Videobet. Awards will vest once the Company has received in cash an amount equal to its total investment in Videobet plus an amount equal to base rate plus 10 per cent p.a. compound on such invested amount. Participants will be able to exercise their awards on a share sale, listing of Videobet or such earlier date as is agreed between the participant and the Company acting through the Remuneration Committee. No current executive director participates in this plan.

The Company also established an HMRC approved Company Share Option Plan (CSOP) in 2010, to retain and incentivise key employees based in the UK in the Group’s UK businesses. The rules of the CSOP were approved by HMRC in August 2010. Under the CSOP options can be granted to UK-based employees up to a maximum of £30,000 and, subject to compliance with the rules of the CSOP, subject only to capital gains tax on any growth in value. Under the rules of the CSOP options may not be exercised until the third anniversary of grant and will lapse if the employee leaves their employment in the Group, except in certain limited circumstances, such as death or disability. No current executive director participates in this plan.

Directors Service ContractsThe service agreements of the executive directors are for an indefinite term and provide for formal notice periods of six months to be served to terminate the agreement, either by the Company or the director. Set out below are the other key terms of the executive directors’ terms and conditions of employment:

Name Date Termination payment Non-compete Change of control payment

Mor Weizer 2.5.2007 Payment in lieu of notice of up to six months basic salary and benefits

During employment and for six months thereafter

None

David Mathewson 25.5.2011 Payment in lieu of notice of up to six months basic salary and benefits

During employment and for twelve months thereafter save that the restriction is six months in the case of customers

None

Ron Hoffman 1.1.2013 Payment in lieu of notice of up to six months basic salary and benefits

During employment and for six months thereafter

None

Executive directors may also receive a pro-rated annual bonus for the period worked in the financial year up to departure, subject to performance.

In the case of David Mathewson, whose employment ceased on 31 December 2012, he was paid his basic salary, but no other benefits, for his contractual notice period. The remuneration committee will consider his performance against targets in assessing the appropriate level of bonus payment in respect of the financial year when the bonus payments to other executive directors and senior managers are decided. In respect of his outstanding share options under the 2005 Plan, in accordance with the terms of the 2005 Plan, the committee has decided that these options may become exercisable for a period of six months following announcement of the 2012 results.

The non-executive directors each have specific letters of appointment, rather than service contracts. Their remuneration is determined by the Board within limits set by the Articles of Association and is set taking into account market data as obtained from independent non-executive director fee surveys and their responsibilities. Non-executive directors are appointed generally for an initial term of three years and, under normal circumstances would be expected to serve for additional three year terms, up to a maximum of nine years, subject to satisfactory performance and annual re-election at the Annual General Meeting as required.


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The following is a summary of the key terms of the letters of appointment for the non-executive directors:

Name Date Term Termination

Roger Withers 14.03.06 No stated term but stands for re-election every three years

90 days notice on either side or if not re-elected, disqualification or commits gross misconduct

Alan Jackson 14.03.06 No stated term 90 days notice on either side or if not re-elected, disqualification or commits gross misconduct

Andrew Thomas* 19.06.12 Until third AGM after appointment 120 days notice on either side or if not re-elected, disqualification or commits gross misconduct

* Andrew Thomas was appointed to his position as a non-executive director on 19 June 2012.

Notwithstanding the terms of the letters of appointment for Roger Withers and Andrew Thomas, all directors will stand for re-election by shareholders on an annual basis in accordance with the Code.

Implementation ReportRole and MembershipThe Remuneration Committee is comprised of three independent non-executive directors. The committee is chaired by Alan Jackson, the senior independent non-executive director and the other members are Andrew Thomas, who joined on his appointment to the Board in June 2012, and Roger Withers. Details of attendance at the committee are set out on page 34.

The committee operates within agreed terms of reference detailing its authority and responsibilities. The committee’s terms of reference were reviewed at the time of the move to a premium listing and are available for inspection on the Company’s website www.playtech.com and include:

• Determining and agreeing the policy for the remuneration of the CEO, the Chairman and other senior managers;• Review the broad policy framework for remuneration to ensure it remains appropriate and relevant;• Review the design of and determine targets for any performance-related pay and the annual level of payments under such plans;• Review the design of and approve any changes to long term incentive or option plans; and• Ensure that contractual terms on termination and payments made are fair to the individual and the Company and that failure is not rewarded.

The committee also considers the terms and conditions of employment and overall remuneration of the executive directors, the Company Secretary & Legal Counsel and other key members of executive management and has regard to the Company’s overall approach to the remuneration of all employees. Within this context the remuneration committee determines the overall level of share options, salaries, incentive payments and performance related pay due to the executive directors and senior management. The committee also determines the performance targets and the extent of their achievement for both annual and long-term incentive awards operated by the Company and affecting the executives. No director is involved any decisions as to his/her own remuneration.

The committee takes advice from both inside and outside the Group on a range of matters, including the scale and composition of the total remuneration package payable to people with similar responsibilities, skills and experience in comparable companies that have extensive operations outside the UK.

During the year, the committee received material assistance and advice from the CEO and from the Company Secretary & Legal Counsel (who is also secretary to the committee).

The committee has a planned schedule of at least four meetings throughout the year, with additional meetings held when necessary. During the year, the committee met six times and these meetings addressed wide variety of issues, including:

Month Principal Activity

March •Approving the terms of the New Plan for the directors and senior managers•Approving the payment of bonus payments to executives•Instructing Canaccord to undertake a valuation of the Chairman’s options using the Black Scholes methodology

April •To approve continuation of options granted to ‘good leavers’•To approve proposed changes to the rules of the Share Plan so as to allow awards to be settled in cash

June •To approve the award of options to key employees of Ash Gaming Limited following its acquisition

October •To consider proposals for the structure of incentives to be granted to senior managers under the New Plan and appropriate performance targets

November •To agree the variation of commission arrangements for certain members of the senior management team

December •To consider and agree terms for the termination of the service agreement of David Mathewson•Approve the proposed package for the appointment of Ron Hoffman as the new CFO

In addition, the remuneration committee met informally and resolved by written resolution to agree to the exercise by the CEO of certain options and the payment to him by the Company of the cash equivalent of the gain on exercising the options, being the closing market value of the Company’s ordinary shares on the day immediately prior to the date of exercise of the option, £4.27, less the cost of exercising the options.


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Playtech FTSE 350 Travel & Leisure (rebased)

External AdvisersNew Bridge Street (a trading name of Aon Hewitt Limited) is the committee’s independent adviser. New Bridge Street does not provide any other services to the Company.

Performance GraphThe following graph shows the Company’s total shareholder return (TSR) performance over the past five years: the Company’s TSR is compared with a broad equity market index. The index chosen here is the FTSE350 Travel & Leisure Index, which is considered the most appropriate published index.

Audited InformationThe following information in this part of the Remuneration Report has been audited by BDO LLP, the Company’s auditors. The Directors’ emoluments, benefits and shareholdings during the year ended 31 December 2012 were as follows:

1. Directors’ Emoluments (in euros)

Director Salary Bonuses BenefitsTotal (excluding option charges)

Option charges

2012 Total emoluments

Executive

Mor Weizer 571,649 208,518 20,009 800,176 100,402 900,578

David Mathewson 368,384 183,515 76,590 628,489 130,850 759,340

2. Non-Executive Directors’ Emoluments (in euros)

Non-Executive Fees

Roger Withers(1) 537,668 – – 537,668 – 537,668

Alan Jackson 185,072 – – 185,072 – 185,072

Andrew Thomas(2) 61,520 – – 61,520 – 61,520

Notes

(1) On 2 May 2012 the Company reached agreement with the Chairman, Roger Withers, to purchase his 300,000 shares under option for a cash payment of £500,000. The cash payment was determined based on the approximate expected value of the share option using the Black-Scholes formula and taking into account the contribution and time Mr. Withers has devoted to the Company.

(2) Andrew Thomas was appointed to the Board on 19 June 2012.


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3. Annual BonusIn 2012 the Chief Executive Officer and David Mathewson had the opportunity to earn bonuses of 150 per cent and 100 per cent of their respective salary. The structure of the annual bonus plan was the same as that described in the Policy Report on page 39.

The Committee determined that the bonuses payable for 2012 was 150 per cent of salary for the CEO (100 per cent of the maximum) and 75 per cent of salary for David Mathewson. These bonus payments were determined against corporate financial performance, which was significantly ahead of budget with an adjusted EBITDA of €186.7 million representing a 49 per cent increase on the prior year and 122 per cent of target, and full achievement of personal objectives.

In 2012, the Chief Executive Officer waived his entitlement to €600,000 of bonus.

4. Termination PaymentAs disclosed above, David Mathewson was paid a sum of £100,000 in lieu of notice on the termination of his employment on 31 December 2012.

5. Directors Interests5.1. Interests of directors in ordinary shares

Ordinary shares

As at 31.12.12 As at 31.12.11

No. shares Percentage** No. Shares Percentage*

Mor Weizer nil nil

David Mathewson nil nil

Ron Hoffman nil nil

Roger Withers 19,333 0.008 19,333 0.008

Alan Jackson 5,000 0.002 5,000 0.002

Andrew Thomas 7,500 0.003 n/a n/a

* Based on the total issued share capital of 289,316,948 as at 31.12.11.** Based on the total issued share capital of 290,236,870 as at 31.12.12.

There has been no change in the directors’ beneficial interests between 31 December 2012 and the date of this report.

5.2. Table of interests of directors in options(1)

Number of Options at 1 January 2012 or date of appointment Date of grant Exercise price

Exercised during the year

Number of options at 31 December 2012 or cessation of employment

Earliest exercise date

Expiry of exercise period

Mor Weizer

200,000 6 February 2006 £2.55 200,000(2) – – –

200,000 11 October 2006 £1.72 200,000(2) – – –

600,000 16 May 2007 £3.79 NIL 600,000 16 May 2008 16 May 2017

200,000 6 November 2009 £3.70 NIL 200,000 6 November 2012 6 November 2019

David Mathewson(3)

100,000 26 August 2011 £3.03 NIL 100,000 15 March 2013 30 June 2013

Notes:

(1) Share options are granted for nil consideration.(2) The share options were exercised on 27 December 2012 and the share price on that date was 423p.(3) The Remuneration Committee on behalf of the Board have agreed as part of the arrangements for the termination of his contract that David Mathewson may retain these options

and exercise them following the end of the Company’s close period for a period of six months following his departure.


The closing share price on 31 December 2012 was 426.6p and the share price ranged from 277.3p and 432.7p during the year.

The options granted under the 2005 Plan have not been subject to performance conditions, as noted in the corporate governance report. It is intended that any awards made to executive directors and members of the senior management team of the Company under either the new plan or the 2005 plan will be subject to the achievement of a mixture of performance conditions based in part on total shareholder return and part in the growth in earnings per share over the period, as the Remuneration Committee determines to be appropriate.

At 31 December 2012 no awards had been made under the 2012 Plan.

None of the non-executive directors have any options over shares in the Company.

By order of the Board

Alan JacksonChairman of the Remuneration Committee14 March 2013


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The Board is required by the Code to establish a nomination committee which should lead the process for board appointments and make recommendations for appointments to the Board. A majority of members of the nomination committee should be independent non-executive directors.

The nomination committee is comprised of the non-executive directors and is chaired by Roger Withers. The committee met twice in 2012: first to consider candidates for the appointment of an additional non-executive director, which led, after a process involving the review, led by the Chairman, of a number of potential candidates, to the appointment of Andrew Thomas; and secondly, to consider the appointment of the Chief Financial Officer following the decision of David Mathewson to step down at the end of the year. In the light of Ron Hoffman’s extensive experience within Playtech’s business, his close in involvement with all of the Group’s successful acquisitions over the last few years and close working relationship with David Mathewson over the previous couple of years, the committee felt that Ron had the correct balance of skills, industry knowledge and experience to fulfil this important role.

In the future the committee will continue to meet whenever necessary during the year, and not less than twice a year.

The primary responsibilities delegated to, and discharged by, the committee include:

• Leading the selection process of candidates and propose to the Board any new Board appointments, whether of executive or non-executive directors; • Considering the balance of skills, knowledge and experience on the Board, and in the light of this evaluation, prepare a description of the role and

capabilities required for a particular appointment; • Making recommendations to the Board for succession plans for executive management, executive and non-executive directors and, in particular,

the CEO; and• Making recommendations to the Board concerning the re-appointment by shareholders of any directors standing for re-election at the Company’s

Annual General Meeting.

Nominations Committee Report

Governance


The Board is required by the Code to establish formal and transparent arrangements for considering how it should apply required financial reporting standards and internal control principles and also for maintaining appropriate relationships with the Company’s external auditors, BDO LLP.

The Audit committee is chaired by Andrew Thomas, who as a qualified Chartered Accountant and member of the Institute of Taxation has recent relevant financial experience, and he was appointed to chair the committee on his appointment to the Board in June 2012. The other members of the Audit Committee are Alan Jackson and Roger Withers, both non-executive directors. The Code recommends that a minimum of three independent non-executive directors should serve on the Audit Committee. From 1 January 2012 to 19 June 2012, the Company was not compliant with this recommendation because there were only two non-executive directors serving on the Board, however since the appointment of Andrew Thomas the Company believes it is compliant with this recommendation.

The Audit Committee met twice during the year, the first meeting which was prior to the appointment of Andrew Thomas, was chaired by Alan Jackson. The CFO and Group Financial Controller were both invited to attend the meetings of the committee as was the external auditor, BDO LLP. On both occasions, the members of the committee were able to meet the auditors without any executive directors being present.

The primary responsibilities delegated to, and discharged by, the committee included:

• Monitoring and challenging the effectiveness of internal control and associated functions; • Approving and amending Group accounting policies; • Reviewing and ensuring the integrity of interim and annual financial statements in particular the actions and judgments of management

in relation thereto before submission to the Board;• Monitor the implementation of the Company’s Code of Business Ethics (“Code”) and compliance with their provisions;• Review the Company’s arrangements for its employees to raise concerns, anonymously or in confidence and without fear of retaliation,

about possible wrongdoing in financial reporting or other matters arising under the Code;• Review promptly all reports on the Company from the internal auditors and reviewing and assess the annual internal audit plan;• Monitoring and approving the scope and costs of audit; and • Ensuring audit independence and pre-approving any significant non-audit services to be provided by the auditor in accordance with the

appropriate committee policy to limit the value of any non-audit services provided by the auditors to 100% of the audit fees in the absence of any exceptional circumstances.

A summary of non-audit fees incurred during 2012, including due diligence, tax advisory and tax compliance work, is included in Note 6 to the Financial Statements on page 72.

Internal ControlThe Company has established a co-sourced internal audit function responsible for reviewing, reporting and monitoring improvements in internal control performance across its operations, involving PricewatershouseCoopers LLP (PwC) and the Group’s Chief Security Officer, Jochanan Sommerfeld. During the year PwC reviewed and updated the existing Group risk register to produce an updated risk register and fully mapped risk wheel. Further work being undertaken focuses on key risk processes and is intended to provide an on-going independent assurance that these key processes are effective.

The Board confirms that an internal audit programme has been agreed by the Audit Committee and any necessary action will be taken to remedy any significant failings or weaknesses identified from the review. This system of internal controls and audit is designed to ensure local legal and regulatory compliance and manage, rather than eliminate, the risk of failure to achieve business objectives. It can therefore only provide reasonable and not absolute assurance against material misstatement or loss.

The Group has a widely publicised Code of Conduct, approved by the Risk & Compliance Committee, a specific delegated authorities framework, and a dedicated compliance function, managed by an experienced Head of Regulatory Affairs and Compliance, to ensure that the Company meets with all applicable regulatory requirements wherever it operates. Performance across the Group is also closely scrutinised against budget and forecasts. These initiatives help establish and promote an improved control environment and working practices.

The Board undertakes a formal assessment of the auditor’s independence each year, which includes:

• A review of non-audit related services provided by the Company and related fees;• Discussion with the auditor of a written report detailing all relationships with the Company and any other parties which could affect independence

or the perception of independence;• A review of the auditor’s own procedures for ensuring independence of the audit firm and partners and staff involved in the audit, including the

rotation of the audit partner;• Obtaining written confirmation from the auditors that they are independent; and• A review of fees paid to the auditors in respect of audit and non-audit services.

The audit engagement partner, having acted in this role for five years, would cease to act in this capacity in accordance with Auditing Practices Board (APB) Ethical Standards. Due to the recent changes made to the Group, principally the move to a premium listing, the significant acquisitions and restructuring activity that has taken place during the current and previous financial year the Group’s Audit Committee has determined, with the agreement of BDO LLP, that it is necessary for the current audit engagement partner to continue in this role until the AGM in 2013 in order to safeguard audit quality, as permitted by the APB Ethical Standard 3 (Revised). This will allow him to sign the report and accounts for the year ended 31 December 2012.

Audit Committee Report

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Under the UK Corporate Governance Code, the Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The Board should maintain a sound system of risk management and internal control systems (Main Principle C.2).

As part of its processes in connection with the move of Playtech from AIM to a premium listing on the Main Market of the London Stock Exchange, and ensuring compliance with the principles of the Code, the Board conducted a review of it’s processes for identifying and managing the significant risks impacting on the business of the Group. In carrying out this review, the Board concluded that the remit of the previous Risk Committee of the Board should be expanded to encompass a review of the risks which could impact on the Group’s businesses arising from changes in the regulation of the market for online gambling in which it’s licensees operate.

In carrying out its review, the Board were assisted by DLA Piper LLP who prepared a detailed review of the legal and regulatory environment as it applies to the supply of remote gambling services and the associated supply of software and services to remote gambling operators, with a particular focus on those jurisdictions from which the Group, via its licensees, derives or is expected to derive over 3% of its revenues.

The revised Risk & Compliance Committee is chaired by Alan Jackson. The other members of the Risk & Compliance Committee are Andrew Thomas and Roger Withers, both non-executive directors, David McLeish, General Counsel and the Head of Regulatory Affairs and Compliance. The Company Secretary, Paul Wright is also the secretary to the committee. In addition, the Internal Auditor and other executives including the CFO, CEO or COO may be invited to attend meetings to present matters or for the committee to have the benefit of their experience.

The revised Risk & Compliance Committee met twice during the year, the first meeting which was in June following the receipt of the report from DLA Piper LLP and the issue of the Company’s prospectus and the second in August at the time of the interim announcement to review and approve the statement of risks set out in the interim report and to review progress on agreed actions arising from the prior meeting. The committee has been kept informed of any changes to the regulatory position in any significant jurisdiction where the Group, through its licensees, may be exposed and updated on progress in relation to agreed action items on a regular basis, and the item is a standing agenda item for consideration at each Board meeting.

The primary responsibilities delegated to, and discharged by, the committee include:

• Review management’s identification, and mitigation of key risks to the achievement of the Company’s objectives;• Review of the most significant risks to the achievement of strategic objectives; • Review of the processes for management and mitigation of most significant risks; • Monitoring incidents and remedial activity;• Agreeing and monitoring the risk assessment programme including, in particular, the assessment of licensees’ suitability;• To agree on behalf of the Board and continually review a risk management strategy and relevant policies for the Company; and• To satisfy itself and report to the Board that the structures, processes and responsibilities for identifying and managing risks are adequate.

A copy of the terms of reference of the Risk & Compliance Committee is available on the investors page of the Company’s website at www.playtech.com.

Principal RisksA table setting out the principal significant risks identified by the Risk & Compliance Committee and the mitigating actions that have been undertaken by the Board in relation to these are set out on pages 48 and 49 of this document.

Risk & Compliance Committee Report

Governance


Playtech BoardAudit CommitteeRisk ManagementCommittee

Integrated Business Risk Management System

Regulatory Risk

Financial Risk

Other Risks

The risks outlined here are those principal risks and uncertainties that are material to the Group. They do not include all the risks associated with Group activities and are not set out in any order of priority. How these risks are identified is described in the Corporate Governance section on pages 33 to 36.

Business Risk Management at Playtech

The Regulatory Environment: Impacts on Reputation and Revenues

RiskThe Group holds a number of licences for its activities from regulators, principally for its activities as a software provider issued by the UK Gambling Commission and the Alderney Gambling Control Commission. Loss of all or any of these licences may adversely impact on the revenues and/or reputation of the Group.

MitigationThe Group has an established compliance function that maintains relationships with regulators, monitors the regulatory environment closely and ensures continuation of all necessary licences and permits that allow the Group to continue its current business.

RiskThe Group licences its products to operators in the online gambling industry whose ability to operate in any jurisdiction may be impacted by changes in regulations, or failure to obtain any necessary licences. Laws and regulations relating to the supply of gambling services are complex, inconsistent and evolving and the Group may be subject to such laws indirectly, insofar as it has assisted the supply to licensees who are themselves subject to such laws and so subject to enforcement risks.

MitigationAs an established regulated supplier to the online gambling industry, the Company is vigilant over legal and regulatory issues that could apply to its activities not only in those jurisdictions where the Company is located, but also in the jurisdictions where its licensees are operating using Playtech’s software and services. Under the terms of its licences, the Group prohibits the acceptance of players from jurisdictions such as the US where the acceptance of bets is clearly prohibited and the enforcement risk is considered to be highest.

RiskNew licensing regimes may impose licensing conditions, such as the requirement to locate significant technical infrastructure within the relevant territory or establish and maintain real-time data interfaces with the regulator that present operational challenges, or may prohibit the ability of licensees to offer the full range of the Group’s products.

MitigationThe Group closely monitors developments in jurisdictions seeking to introduce new licensing regimes and seeks to establish joint venture relationships, or other close contractual relationships, with key local operators with influence on the development of local regulation. In addition, through the participation of the Group in industry bodies such as the Remote Gambling Association, it seeks to influence the shape of new licensing regulations.

Governance

Key RisksAchieving Playtech’s strategic goals while minimising some of the key risks the business faces will deliver sustainability and long-term growth.

Changes in Taxation of Group Revenue: Impacts on Net Earnings

RiskThe Group benefits from favourable arrangements in some of the jurisdictions in which it is established. Changes in taxation legislation and rates may impact the Group’s net earnings and cash flows.

MitigationThe Group works closely with its tax advisers to review its tax position, undertake periodic tax audits and monitor any changes in tax rates.

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RiskFollowing William Hill’s exercise of it’s call option over the Group’s stake in WHO, that the Board cannot replace the revenue derived from that stake and the Group’s performance declines.

MitigationThe Board intends to use the cash proceeds, in the best interests of shareholders at that time, which may include all or any of the following: funding of further acquisitions, the establishment of new joint ventures, the development of new technologies or a capital return to shareholders.

Business Continuity and Technology Risk: Impacts on Revenues

Reliance on Key Personnel: Impacts on Revenues

The Competitive Landscape: May Lead to Loss of Customers and Revenues

The Economic Climate: May Lead to Loss of Customers and Revenues

RiskThe gambling industry is extremely competitive and so is the related software and services industry that supports it. Failure to compete effectively may result in the loss of licensees and also the inability to attract new licensees.

MitigationThe Group continues to invest significant resources in research and development in order to enhance its technology, products and services, and in making strategic acquisitions to broaden the range of technologies and products that it can offer to licensees.

RiskThe economic climate remains challenging and uncertain. While the performance of the business has been resilient so far, that may not always be the case and consumer discretionary spending could be diverted away from gaming and the Group’s revenues would fall.

MitigationPlaytech’s licensees are geographically diverse, which should mitigate relianace on any particular region. Management closely monitors business performance and if a downturn were to occur remedial action, comensurate with the nature and scale of the slow down, could be taken.

RiskThe Group derived material levels of profit from associates, and failure to manage effectively the Group’s Partnerships may reduce these levels of profit, and/or damage to the Group’s ability to enter into future such relationships.

MitigationThe Group is committed to the success of all of its customers and partners and meets regularly with them to agree strategies to increase the profitability of the ventures and to maintain good working relationships.

RiskThe Group’s future success depends in large part on the continued service of executive directors, senior managers and key personnel, the retention of whom cannot be guaranteed.

MitigationThe Group has introduced a comprehensive performance evaluation system to identify key talent and to ensure that key personnel are appropriately rewarded and incentivised through a mixture of annual bonuses and long-term incentives linked to the attainment of business objectives and revenue growth.

RiskThe Group’s ability to compete effectively depends amongst other things, on its ability to protect, register and enforce, as appropriate, its intellectual property rights.

MitigationThe Group registers patents and trademarks, where this is possible, to protect key aspects of its intellectual property. In addition, proprietary and/or confidential information, and IP is protected through legal and physical security process and Playtech vigorously defends itself against third-party claims.

RiskThe Group and its licensees are constantly vulnerable to hacking, Distributed Denial of Service (“DDoS”) attacks, malicious acts and cybercrime.

MitigationThe Group adopts industry-standard protections to detect any intrusion or other security breeches, together with preventative measures safeguarding against sabotage, hacking, viruses and cybercrime. The Group works continuously to improve the robustness and security of the Group’s information technology systems. In addition, the Group has put in place disaster recovery processes.


Corporate Social Responsibility

OverviewPlaytech’s continued commitment to integrating corporate social responsibility into its businesses supports its ability to generate sustainable long-term value, enhancing delivery on its strategic objectives.

Sustainability

The issues of interest to the Company’s stakeholders can be grouped into five areas:

#1 WorkplaceThe well being of our employees, and how we attract, develop and retain the best talent

#3 MarketplaceWorking with regulators, partners and licensees to further responsible gaming

#2 GovernanceMaintaining high standards of corporate governance to monitor and mitigate risks associated with the business

#5EnvironmentMitigating the Company’s environmental impact, where relevant and appropriate, to reflect the nature and scale of its business

#4CommunityOur broader community- related obligations in those locations where our employees, business partners and licensees live and work

The programme to put in place consistent documentation and Group-wide policies and procedures that started in 2011, as well as a number of employee-related improvements continues.

Alan Jackson, chairman of the Risk Committee, has Board-level responsibility for the programme.

WorkplacePlaytech understands that the success of its business is due to the vital contribution made by its employees. It is therefore essential to the Company’s continued growth and development that it is able to attract and retain talented employees who will contribute to the long-term success of the business.

The Group is fully committed to equality of opportunity and dignity at work for all. Its primary aim in this area is to recruit the best and most appropriate employees, irrespective of race, religion, ethnic or national origins, gender, sexuality, disability, class or age, working to the highest standards across the Group.

Playtech operates in a highly-competitive industry and so retaining key staff is a priority. The Company provides financial rewards and a positive working environment, developing employees’ skills for improved performance and increased job satisfaction levels.

GovernancePlaytech’s Board is responsible for the Group’s financial and operational performance, ensuring the success and sustainability of the business by directing and supervising the Company’s policies and strategies.

In an industry which continues to undergo significant structural changes, the Board’s role has never been more important, not least following the Company’s move in July 2012 to a Premium Listing on the London Stock Exchange.

The identification of significant risks facing the business, and processes to monitor and mitigate them, is covered in more detail on pages 48 and 49.

The Company believes that its true value is not solely demonstrated by its balance sheet and financial results, but should include other, more intangible attributes, such as its people, brand and reputation.

By embracing policies and behaviours that govern responsible conduct, the Company creates more valuable relationships with its stakeholders, enhancing trust bydemonstrating its focus on, and management of, the material non-financial risks in the business. Playtech believes that a responsible approach to these challenges, together with risk assessment and mitigation, will positively impact its ability to succeed operationally and strategically.

Focus on SustainabilityPlaytech continues to improve its understanding and monitoring of material non-financial risks, despite operating in a highly-dynamic and rapidly-changing environment.

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Male 66%

Female 34%

Below 30 49%

30-45 49%

Above 45 2%

The Group has an experienced Chief Compliance Officer who focuses the Company’s efforts on regulatory matters, and this is of particular significance as Playtech continues to expand its regulated markets offering.

CommunityPlaytech recognises its responsibility to support the local and international communities in which it operates, and employs a social involvement (SI) programme accordingly. The Company values the positive influence on its employees’ personal and professional development that can be found through volunteer work, and sees it as important for the business over the long-term. The Company’s employees are actively engaged in supporting charities and Playtech has expanded its SI programme to focus on initiatives that deliver educational support and assistance to disadvantaged children in those countries where the Group has operations.

In 2012 Playtech gave approximately €50,000 to charitable organisations working in the fields of education and research into, and treatment of, problem gambling (2011: €100,000). Playtech also provided non-financial support to these causes, including computer hardware and training.

EnvironmentIn comparison to other global companies, Playtech has a relatively low environmental impact, by virtue of the fact that it is an online business with a limited number of office locations. The day-to-day running of the business will inevitably have consequences, particularly in terms of energy consumption and travel, and the Company has put in place processes to monitor its carbon dioxide emissions from air travel and reduce any unnecessary travel.

Where it is necessary to take new office space, consideration is made for the implementation of greater energy-efficient measures. In Estonia, the building was designed with a highly efficient cooling system for the computer room, and in all new locations there has been a move to reduce energy consumption. With a ratio of employees to printers of over 30, the offices can be seen to be increasingly paperless environments. In addition, bottled water has been largely replaced by water fountains, and where local schemes exist, waste is separated and recycled.

Marketplace Playtech’s CSR marketplace metrics focus on stakeholder perceptions of the Company’s relationships with licensees and its responsiveness to their requirements; and on Playtech’s relationships with regulators and other industry bodies.

The Company will look to report on these, and include cause, conduct surveys to ensure that it properly understands external perceptions of the business and manages its reputation.

Playtech delivers a high quality service to its licensees so that they can offer the best customer experience. The Company works to monitor customer satisfaction levels across the licensee base as the retention of licensees is central to the sustainability of its business model. Playtech places great value on its relationships with gaming regulators around the world and works with them to ensure all aspects of the business meet or exceed their standards.

In a rapidly changing industry environment, where newly-regulating markets play a central role, it is critical that the Company’s reputation as the best quality partner in the industry is maintained and promoted. Playtech’s customers are its licensees and the Company plays a central role in helping them to manage their gaming operations responsibly. The Company’s approach to Responsible Gaming is discussed in detail on pages 54 and 55.

Gender

Age

Employees Profile


2012

2011 1,737

2010 1,112

2,828

Corporate Social Responsibility (continued)

Playtech’s people Attracting the best talent, together with motivating and retaining employees, is fundamental to Playtech’s business sustainability and industry leadership.

Sustainability

Product DevelopmentPlaytech’s software business is structured along product lines, with separate business units for each product area, such as the IMS, casino, poker, bingo and sports, and across the online, live dealer, mobile and land-based delivery channels. This structure aims to ensure that Playtech can manage the demands of increasing operational scale, as existing licensees develop and new customers migrate to the Company’s gaming platform.

In practice, this approach co-locates product teams so that, for example, those employees working on Playtech’s casino product are all located in Tartu, Estonia, with content and software developers, quality assurance and product delivery teams working closely together on the same office floor. This approach enhances collaboration and enables the team to quickly identify and resolve any technical issues that may arise.

Since 2011, Playtech has deployed a software delivery management process which has reduced the time-to-market for new games and launch time for new licensees. The Company’s intelligent approach to managing project workflows is a significant competitive advantage when compared to its peers.

Playtech has also looked to utilise outsourcing resources, or to deliver a greater ability to licensees to self-manage their content. This greater degree of control has benefits for the licensee in terms of faster deployment time for new content and helps to maximise the productivity of Playtech’s development teams.

Playtech’s R&D operations are among the biggest in the online gaming industry and employ over 850 people, principally devoted to software development. The scale of Playtech’s R&D function helps it to maintain a competitive advantage in technology innovation, content development and product pipeline.

The Company’s extensive experience and capabilities enable it to be neutral as to the technology platform or system when developing new solutions for licensees so that it is able to offer its market-leading products and services to the widest possible customer base. This flexibility offers a substantial advantage as licensees increasingly look for a combination of both download and browser-based formats for the same games, and across platforms ranging from online to mobile and gaming terminals.

Locations and PeoplePlaytech is headquartered in the Isle of Man and has seven main offices, including principal software development centres in Estonia (Tartu and Tallinn), Bulgaria, the UK (London, Manchester and Ipswich) and Israel. PTTS has substantial offices in Bulgaria and the Philippines as well as a corporate centre in Cyprus. In 2012, Playtech employed an average of 2,828 people. At the end of the year, total headcount was over 2,600 people.

In addition to the permanent headcount, Playtech has a programme to outsource certain ancillary development and service activities, which are predominately production-related rather than software development. This speeds up time-to- market for routine upgrades and frees up key development resources. Playtech’s outsourcing partner, Ciklum, is an experienced service provider with a facility based in the Ukrainian city of Kiev. PTTS also outsources some basic emarketing processes and reconciliation activities.

Average Number of Employees

2,828 +63%2011: 1,737

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Playtech’s culture focuses on the continued improvement of its workforce, driven by a strong ethos of innovation, technological development and the delivery of market-leading performance. Many of Playtech’s new employees are referred by existing staff, reflecting the Company’s focus on developing a close-knit collegiate corporate culture. Ongoing training and career development are important elements of Playtech’s sustainability efforts.

Employee PerformanceWhile the development of market-leading software and products is at the heart of Playtech’s growth, licensees naturally expect 24/7 operational performance and efficient delivery. The Company’s business units are integral to ensuring Playtech meets the requirements of its licensees and employees are rewarded accordingly.

Playtech’s appraisal system is based around individual business unit and Group-wide objectives, which are directly aligned to Group strategy and specific areas of implementation and execution. Employees have clearly defined objectives and targets that are set in each review period, and their performance is routinely measured against these objectives.

Employee remuneration includes competitive salaries and cash bonuses, which are set by reference to the achievement of the aformentioned objectives, and by the demonstration of other competencies and contributions to the Group. A revised long-term, share-based incentive scheme to attract and retain the best operational and business managers was implemented in 2012.

Customer Service The service-orientated philosophy underpinning Playtech’s content development activities can also be found in its product and infrastructure operations, with a team of over 150 people providing a 24/7 support service to licensees.

From the beginning of every project, Playtech supports its licensees, drawing on over a decade of experience and more than 110 licensees. Dedicated teams, staffed by professionals from all disciplines, provide complete project and launch management, assisting with strategy, business planning, compliance and regulatory requirements, through to recruitment and team building.

Playtech provides its customers’ operational teams with an intensive two-week training programme ahead of launch. Thereafter, each licensee is assigned an experienced account manager who provides day-to-day support and a point of contact. Customers can draw on a pool of product and technology specialists to advise on any issues, and a consulting team provides value-added input to optimise the tools available on the Playtech platform. Valuing Our PeoplePlaytech’s market-leading position is a significant asset in its efforts to attract the best talent in the industry. Candidates are drawn to Playtech by the combination of its highly motivated, entrepreneurial team culture and its breadth of knowledge and ability to harness cutting-edge technology. This has also been an important factor in Playtech’s corporate acquisitions, where the potential to benefit from such a large and experienced support network has been a key discussion point and decision factor for a management team assessing the benefits of joining Playtech.

Once again, Playtech’s people were well represented in leading gaming magazine G1Q’s ‘Hot 50’ talented people.


Corporate Social Responsibility (continued)

Responsible GamingAs a leader in the online gaming industry, Playtech takes its responsibilities to operators and regulators seriously and is focused on co-operating with both parties on issues of responsible gaming.

Sustainability

Responsible GamingThe Company’s fully-integrated management system provides operators with the latest responsible gaming protocols. Embedded systems and controls ensure fair play and facilitate responsible gaming for players and ensure a safe playing environment for all.

Playtech’s software and services provide operators with the means to deploy advanced responsible gaming protocols and sophisticated player tracking, across all products and platforms, to control and prevent issues such as compulsive usage and under-age access of the Company’s gaming products. The Group has contributed financially to the work of the Responsible Gambling Trust (formerly the Great

Foundation), a UK charity dedicated to supporting research into problem gambling, education and training.

Playtech is also an associate member of the World Lottery Association (WLA), the global professional association for state lottery and gaming organisations. The WLA and its members are committed to maintaining the highest ethical standards of gaming.

Certification and RegulationAs a responsible supplier to the regulated gaming industry, Playtech’s systems comply with all the guidelines published by the variety of well-regulated jurisdictions in which its licensees operate. The Company partners with regulatory and governmental bodies, and all its products undergo comprehensive testing by independent third parties.

Playtech is an active member of the Remote Gambling Association (RGA), which has developed an industry code of practice on social responsibility and age verification, which the Company fully supports. As part of the certification process, Playtech’s games and their software engines – including the random number generators – are regularly tested and certified by leading industry bodies to ensure consistency and fair play.

PhilosophyResponsible gaming is an integral part of Playtech’s institutional mindset and a significant factor in all of its activities. As a software provider, the Company is not directly in contact with players, but responsible gaming nonetheless remains a fundamental issue for the Company in safeguarding its business and reputation, and for the continued responsible development of the industry. Within PTTS, Playtech has a greater degree of contact with players on behalf of its licensees, and is consequently dedicating, with its operators, a substantial focus on the proper management of the relevant responsible gaming protocols.

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This activity focuses on the early identification of the small percentage of players that have the potential, under certain circumstances, to develop gambling-related problems and the much smaller group who demonstrate an inability to control their gaming habits or actions.

In addition to the self-help tools above, the customer services team is trained in their interactions with players to identify certain actions or comments that indicate a current or emerging problem. For those displaying problem gambling characteristics, the team is trained to manage their exclusion and provide information on how to seek necessary help.

Fraud, Money Laundering and Fair PlayAn integral part of Playtech’s technology platform is its ability to monitor and identify fraud and money laundering. Playtech employs a dedicated security team focused on ensuring that it is at the forefront of industry best-practice. With comprehensive monitoring of transactions and gaming behaviour, licensees are able to ensure that players cannot gain an advantage through unfair means. This is a particular focus in player-to-player games such as poker, to minimise any risk of player collusion.

The Group holds a certificate of evaluation from the accredited testing facility TST which is part of Gaming Laboratories International (GLI), the world’s largest independent gaming testing and certification laboratory. Playtech also holds an official Certificate of Prior Approval from the Alderney Gambling Control Commission (AGCC). In regulated markets, such as Italy, France, Spain, Estonia and Finland, Playtech’s software has been reviewed and passed for use by the local regulators.

Operator and Player ToolkitEvery licensee is provided with Playtech’s transparency toolkit, which is embedded in the Company’s software and includes viewable player protection content and the following tools:

• Compulsive gambling prevention• Age verification• Deposit limits• Bet limits• Session time limits• Self-exclusion tools

The Company also provides comprehensive training and ongoing support to licensees to ensure that they are providing the maximum protection to their customers.

Where Playtech provides external and/or internal marketing services to a licensee, it puts in place clear protocols and procedures for player engagement. Playtech’s technology platform provides the tools to identify and manage any player thought to be showing indications of problem gaming, and regular dialogue, reporting and joint training exercises with licensees address any concerns that arise.

“ Playtech’s software and services provide operators with the means to deploy advanced responsible gaming tools to control and prevent issues such as compulsive usage and under-age access. The Group has contributed financially to the work of the Responsible Gambling Trust, a UK charity dedicated to supporting research into problem gambling, education and training.”

Certification Charities supported


The directors have elected to prepare the financial statements for the Group in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group, for safeguarding the assets and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

International Accounting Standard 1 (revised) requires that financial statements present fairly for each financial year the Group’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ’Framework for the Preparation and Presentation of Financial Statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards. A fair presentation also requires the directors to:• Select and apply appropriate accounting policies;• Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and• Provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact

of particular transactions, other events and conditions on the entity’s financial position and financial performance.

All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Group’s auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the auditors are unaware.

The financial statements are published on the Group’s website. The maintenance and integrity of the Group’s website is the responsibility of the directors. The directors’ responsibility also extends to the continued integrity of the financial statements contained therein.

Statement of Directors’ Responsibilities

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We have audited the financial statements of Playtech Limited for the year ended 31 December 2012 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated Statement of Cash flow and the Consolidated Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

This report is made solely to the Company’s members as a body, in accordance with Section 80C of the Isle of Man Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, and the Company’s members as a body for our audit work, for this report, or for the opinion we have formed.

Respective responsibilities of directors and auditorsAs explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable Isle of Man company law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm

Opinion on the financial statementsIn our opinion: • The financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 31 December 2012 and of the

Group’s profit for the year then ended;• The Group financial statements have been properly prepared in accordance with IFRS as issued by the International Accounting Standards Board; and• The parent company financial statements have been properly prepared in accordance with IFRS as issued by the International Accounting Standards

Board and as applied in accordance with the provisions of the Isle of Man Companies Act 2006.

Matters on which we are required to report by exceptionUnder the Listing Rules we are required to review the part of the corporate governance statement relating to the Company’s compliance with the nine provisions of the UK Corporate Governance Code specified for our review.

BDO LLPChartered AccountantsLondonUnited Kingdom

14 March 2013

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Independent Auditor’s Report to the Shareholders of Playtech Limited


2012 2011

NoteActual€’000

Adjusted*€’000

Actual€’000

Adjusted*€’000

Revenues 4 317,504 317,504 207,485 207,485

Distribution costs before depreciation and amortisation (156,658) (154,841) (100,830) (98,019)

Administrative expenses before depreciation and amortisation (29,630) (26,450) (25,364) (20,069)

Operating profit before depreciation and amo rtisation 6 131,216 136,213 81,291 89,397

Share of profit of associate 13a 44,824 50,553 30,344 36,073

Amortisation of intangibles in associate 13a 5,729 – 5,729 –

Income from associate 13a 50,553 50,553 36,073 36,073

Share of loss from joint ventures, net (46) (46) (546) (546)

EBITDA 181,723 186,720 116,818 124,924

Depreciation and amortisation, including amortisation of intangibles in associate (49,493) (17,108) (34,866) (13,299)

Financing income 7 4,096 4,096 3,972 3,946

Finance cost – movement in deferred and contingent consideration (44,184) – (6,075) –

Finance cost – other (3,112) (3,112) (1,186) (1,186)

Total financing cost 7 (47,296) (3,112) (7,261) (1,186)

Profit before taxation 89,030 170,596 78,663 114,385

Tax expense 8 (2,101) (2,101) (957) (1,528)

Profit for the year 86,929 168,495 77,706 112,857

Other comprehensive income for the year:

Adjustments for change in fair value of available for sale equity instruments 15 15,227 15,227 1,995 1,995

Total comprehensive income for the year 102,156 183,722 79,701 114,852

Profit for the year attributable to:

Owners of the parent 86,755 168,321 77,696 112,847

Non-controlling interest 174 174 10 10

86,929 168,495 77,706 112,857

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

the year:

Basic (cents) 9 30.0 58.1 31.8 46.2

Diluted (cents) 9 29.4 57.1 31.4 45.7

Total comprehensive income attributable to:

Owners of the parent 101,982 183,548 79,691 114,842

Non-controlling interest 174 174 10 10

102,156 183,722 79,701 114,852

* Adjusted numbers relate to certain non-cash and one-off items including amortisation of intangibles on acquisitions, amortisation of intangibles in associate, professional costs on acquisitions, finance costs on acquisitions, legal costs related to the litigation with associate and costs of admission to a premium listing on the main market, and additional various non-cash charges. The directors believe that the adjusted profit represents more closely the underlying trading performance of the business. A full reconciliation between the actual and adjusted results is provided in Note 5.

Consolidated Statement of Comprehensive IncomeFor the year ended 31 December 2012

Financial Statements

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Additional paid in capital

€’000

Available for sale reserve

€’000

Retained earnings

€’000

Total equity attributable

to holders of parent €’000

Non-controlling

interest €’000

Total equity€’000

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

Balance at 1 January 2012 307,853 1,995 168,891 478,739 (49) 478,690

Changes in equity for the year

Total comprehensive income for the year – 15,227 86,755 101,982 174 102,156

Dividend paid – – (70,440) (70,440) – (70,440)

Prior period share issue cost (41) – – (41) – (41)

Exercise of options 3,023 – – 3,023 – 3,023

Purchase of share options – – (1,616) (1,616) – (1,616)

Cancellation of treasury shares (366) – 366 – – –

Employee stock option scheme – – 2,403 2,403 – 2,403

Balance at 31 December 2012 310,469 17,222 186,359 514,050 125 514,175

Consolidated Statement of Changes in EquityFor the year ended 31 December 2012


Consolidated Balance SheetAs at 31 December 2012


Note2012

€’000 2011*

€’000

NON-CURRENT ASSETS

Property, plant and equipment 11 20,304 21,548

Intangible assets 12 372,387 365,201

Investments in equity accounted associates & joint ventures 13 156,036 162,997

Available for sale investments 15 35,333 12,376

Other non-current assets 16 5,175 2,820

589,235 564,942

CURRENT ASSETS

Trade receivables 17 47,784 30,939

Other receivables 18 26,560 20,228

Cash and cash equivalents 19 120,880 164,832

195,224 215,999

TOTAL ASSETS 784,459 780,941

EQUITY

Additional paid in capital 310,469 307,853

Available for sale reserve 15 17,222 1,995

Retained earnings 186,359 168,891

Equity attributable to equity holders of the parent 20 514,050 478,739

Non-controlling interest 125 (49)

TOTAL EQUITY 514,175 478,690

NON-CURRENT LIABILITIES

Loans and borrowings 22 31,250 13,746

Other non-current liabilities 21 215 1,423

Deferred revenues 9,092 8,919

Deferred tax liability 24 5,232 5,287

Deferred consideration 14 26,735 41,752

Contingent consideration 14 15,826 110,985

88,350 182,112

CURRENT LIABILITIES


Trade payables 32 14,522 13,056

Progressive,operators’ jackpots and security deposits 31,607 36,053

Tax liabilities 1,946 1,837

Deferred revenues 3,679 4,986


Contingent consideration 14 – 929

Other payables 25 22,461 15,900

181,934 120,139

TOTAL EQUITY AND LIABILITIES 784,459 780,941

The Financial Statements were approved by the Board and authorised for issue on 14 March 2013.

Mor Weizer Ron HoffmanChief Executive Officer Chief Financial Officer

* See Note 2 for details of the reclassifications.

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Consolidated Statement of Cash FlowsFor the year ended 31 December 2012

2012 €’000

2011 €’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit after tax 86,929 77,706

Adjustments to reconcile net income to net cash provided by operating activities (see overleaf) 29,041 (1,525)

Income taxes paid (3,174) (1,821)

Net cash provided by operating activities 112,796 74,360

CASH FLOWS FROM INVESTING ACTIVITIES

Long term deposits and loan advances (2,393) 2,593

Dividend received from equity-accounted associate 47,334 35,087

Acquisition of property, plant and equipment (8,007) (12,562)

Investment in joint ventures (note 13b & c) – (6,108)

Acquisition of intangible assets (2,210) (79)

Return on investment in joint ventures 1,027 1,663

Acquisition of subsidiaries, net of cash acquired (143,148) (97,189)

Capitalised development costs (14,851) (9,542)

Investment in available for sale investments (7,730) –

Investment in equity-accounted associates (note 13a) – (15,001)

Proceeds from sale of property, plant and equipment 1,046 1,138

Net cash used in investing activities (128,932) (100,000)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid to the holders of the parent (70,440) (23,377)

Issue of share capital, net of issue costs – 117,549

Purchase of treasury shares – (366)

Purchase of share options (1,616) –

Proceeds from bank borrowings 75,000 27,533

Repayment of bank borrowings (33,783) –

Exercise of options 3,023 614

Net cash (used in)/from financing activities (27,816) 121,953

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (43,952) 96,313

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 164,832 68,519

CASH AND CASH EQUIVALENTS AT END OF YEAR 120,880 164,832


Consolidated Statement of Cash Flows (continued)For the year ended 31 December 2012

2012 €’000

2011 €’000

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

Income and expenses not affecting operating cash flows:

Depreciation 8,118 5,364

Amortisation 35,646 23,773

Income from associate (50,553) (36,073)

Amortisation of intangibles in associate 5,729 5,729

Share of net loss in joint ventures 46 547

Decline in fair value of available for sale investment – 551

Movement in deferred and contingent consideration 44,184 6,075

Employee stock option plan expenses 2,403 4,678

Income tax expense 2,101 957

Other 74 105

Changes in operating assets and liabilities:

Increase in trade receivables (17,603) (5,662)

Increase in other receivables (3,024) (5,461)

Increase/(decrease) in trade payables 1,122 (17,359)

(Decrease)/increase in progressive, operators’ jackpot and security deposits (3,034) 9,056

Increase in other payables 4,966 8,126

Decrease in deferred revenues (1,134) (1,931)

29,041 (1,525)

Acquisition of subsidiary, net of cash acquired

Note2012

€’0002011

€’000

A. Acquisition of Geneity Limited 26a 18,200 –

B. Acquisition of Juego Online EAD 26b 5,996 –

C. Acquisition of Intelligent Gaming Systems Limited 27a 952 2,836

D. Acquisition of PT Turnkey Services Limited 27b 118,000 44,314

E. Acquisition of Mobenga AB Limited 27c – 7,830

F. Acquisition of Ash Gaming Limited 27d – 27,027

G. Acquisition of S-Tech Limited 27e – (339)

H. Acquisition of GTS Limited – 7,399

I. Acquisition of Virtue Fusion – 8,122

143,148 97,189

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Notes to the Financial StatementsFor the year ended 31 December 2012


NOTE 1 – GENERALOn 21 June 2012 Playtech Limited (the “Company”) re-domiciled as a company in the Isle of Man. Prior to this date it was a company domiciled in the British Virgin Islands and was incorporated on 12 September 2002 as an offshore company with limited liability.

Playtech and its subsidiaries (the “Group”) develop unified software platforms for the online and land-based gambling industry, targeting online and land-based operators. 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.

Basis of PreparationThe directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing its financial statements.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIESThe significant accounting policies followed in the preparation of the financial statements, on a consistent basis, are:

Accounting PrinciplesThis financial statements has 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 IFRS”). 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 2012.

Changes in Accounting Policiesa) New standards, interpretations and amendments effective from 1 January 2012The following new standard, interpretation and amendment, applied for the first time from 1 January 2012, have had an effect on the financial statements:

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

None of the other new standards, interpretations and amendments effective for the first time from 1 January 2012, have had a material effect on the financial statements.

b) New standards, interpretations and amendments not yet effectiveThe following new standards, interpretations and amendments, which have not been applied to these financial statements, will or may have an effect on the Group’s future financial statements:

• Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) (effective for annual periods beginning on or after 1 July 2012);• IFRS 10 Consolidated Financial statements (effective for annual periods beginning on or after 1 January 2014);• IFRS 11 Joint Arrangements (effective for annual periods beginning on or after 1 January 2014);• IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014);• IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013);• IAS 27 Separate Financial Statements (effective for annual periods beginning on or after 1 January 2014);• IAS 28 Investments in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2014);• Disclosures – Offsetting Financial Assets and Liabilities (Amendments to IFRS 7) (effective for annual periods beginning on or after 1 January 2013); and• Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (effective for annual periods beginning on or after 1 January 2014).

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:

• Annual Improvements to IFRS (2009 – 2011 Cycles) (effective for annual periods beginning on or after 1 January 2013); • Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10,

IFRS 11, and IFRS 12); and• IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2015).

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

None of the other new standards, interpretations and amendments, which are effective for periods beginning after 1 January 2012 and which have not been adopted early, are expected to have a material effect on the Group’s future financial statements.


NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Foreign CurrencyThe financial statements of the Company and its subsidiaries are prepared in euros (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 euros in accordance with the principles set forth by International Accounting Standard (IAS) 21 (“The Effects of Changes in Foreign Exchange Rates”). Accordingly, transactions and balances have been converted as follows:

• Monetary assets and liabilities – at the rate of exchange applicable at the balance sheet date; and• Income and expense items – at exchange rates applicable as of the date of recognition of those items. Non-monetary items are converted at the rate

of exchange used to convert the related balance sheet items i.e. at the time of the transaction. Exchange gains and losses from the aforementioned conversion are recognised in the consolidated statement of comprehensive income.

Basis of ConsolidationWhere 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. The consolidated financial statements present the results of the Group as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

Revenue Recognition 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. Income is recognised in the accounting periods in which the gaming transactions occur or the services are rendered. Royalty and other income receivable under fixed-term arrangements are recognised over the term of the agreement on a straight line basis.

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

Share-based PaymentsCertain employees participate in the Group’s share option plans which commenced with effect from 1 December 2005. 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. Fair value is determined by the Black-Scholes and Binomial valuation model. The share options plan does not have any performance conditions other than continued service.

Income Taxes and Deferred TaxationProvision 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.

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:

• The initial recognition of goodwill;• 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• 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.

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).

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:

• The same taxable Group Company; or• 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.

Dividend DistributionFinal dividends are recorded in the Group’s financial statements in the period in which they are approved by the Group’s shareholders. Interim dividends are recognised when paid.

Notes to the Financial Statements (continued)For the year ended 31 December 2012

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NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Property, Plant and EquipmentProperty, plant and equipment comprise computers, leasehold improvements, office furniture and equipment, and motor vehicles and are stated at cost less accumulated depreciation. Carrying amounts are reviewed on each balance sheet date for impairment. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

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. The principal annual rates used for this purpose, which are consistent with those of the previous years, are:

%

Computers and gaming machines 33

Office furniture and equipment 7-20

Building and leasehold improvements 10-20, or over the length of the lease

Motor vehicles 15

Subsequent expenditures are included in the asset 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. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

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

Business CombinationsThe consolidated financial statements incorporate the results of business combinations using the purchase method. 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. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained.

Investments in Subsidiary UndertakingsInvestments in subsidiary undertakings are recognised at cost less, if any, provision for impairment.

Intangible AssetsIntangible assets comprise externally acquired patents, domains, and customer lists. Intangible assets also include internally generated capitalised software development costs. All such intangible assets are stated at cost less accumulated amortisation. Where intangible assets are acquired as part of a business combination they are recorded initially at their fair value. Carrying amounts are reviewed on each balance sheet date for impairment. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount. 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 principal annual rates used for this purpose, which are consistent with those of the previous years, are:

%

Domain names Nil

Internally generated capitalised development costs 33

Technology IP 20-33

Customer list 7-12.5

Affiliate contracts 5-12.5

Patents and license Over the expected useful lives 10-33

Intangible assets identified under the investment in equity accounted associates:

%

Software 10

Customer relationships 71

Affiliate contracts 52

WH Brands 7

Purchased assets brands 10

Covenant not to compete 20

Management believes that the useful life of the domain names is indefinite. Domain names are reviewed for impairment annually.


NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Intangible Assets (continued)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.

Subsequent expenditure on capitalised intangible assets is capitalised only where it clearly increases the economic benefits to be derived from the asset to which it relates. All other expenditure, including that incurred in order to maintain an intangible assets current level of performance, is expensed as incurred.

GoodwillGoodwill 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.

For business combinations completed prior to 1 January 2010, cost comprised the fair value of assets given, and liabilities assumed, plus any direct costs of acquisition. 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.

For business combinations completed on or after 1 January 2010, cost comprises the fair value of assets given and liabilities assumed, plus the amount of any non-controlling interests in the acquired business. 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. 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.

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

ImpairmentImpairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. 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. Where the carrying value of an asset exceeds its recoverable amount (i.e. – the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

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. – the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows). 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.

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. An impairment loss recognised for goodwill is not reversed.

AssociatesWhere 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. Associates are initially recognised in the consolidated balance sheet at cost. 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.

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. The investor’s share in the associate’s profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

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

Joint VenturesThe Group’s investment in a jointly controlled entity is included in the financial statements under the equity method of accounting. 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.

Financial AssetsThe Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity. The Group does not hold any financial assets at fair value through profit and loss.


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NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Loans and Receivables These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. 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’s receivables comprise trade and other receivables, cash and cash equivalents, and loans to customers in the balance sheet.

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. 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. Bad debts are written off when identified.

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. Where cash is on deposit with maturity dates greater than three months, it is disclosed within other receivables.

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. They are classified between current and non-current assets in accordance with the contractual repayment terms of each loan agreement.

Available-for-Sale Financial AssetsNon-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. 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. 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.

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. 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.

Changes in fair value are recognised in other comprehensive income and accumulated in the available-for-sale reserve except to the extent that any decrease in value in excess of the credit balance on the available-for-sale reserve, or reversal of such a transaction, is recognised in profit or loss.

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

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

Several of the Group’s licensees participate in progressive jackpot games. Each time a progressive jackpot game is played, a preset amount is added to a cumulative jackpot for that specific game. The accrual for the jackpot at the consolidated balance sheet date is included in progressive jackpot and other operator’s jackpot liabilities.

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

Fair Value Measurement HierarchyIFRS 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 30). The fair value hierarchy has the following levels:

a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly

(i.e. – derived from prices) (Level 2); andc) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The level in the fair value hierarchy within which the financial asset or financial liability is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the three levels.


NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Long-term LiabilitiesLong term liabilities are those liabilities that are due for repayment or settlement in more than 12 months from balance sheet date.

Provisions 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.

LeasesWhere substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an “operating lease”), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight line basis.

Non-controlling InterestsNon-controlling interest is recognised at the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. 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.

Treasury SharesConsideration paid/received for the purchase/sale of treasury shares is recognised directly in equity. The cost of treasury shares held is presented as a separate reserve (the “treasury share reserve”). Any excess of the consideration received on the sale of treasury shares over the weighted average cost of the shares sold is credited to retained earnings.

Reclassifications in the Prior YearThe Group has reclassified some of the comparatives in the balance sheet to show all security deposits along with progressive and other jackpots owed to customers. For the year ended 31 December 2011, trade receivables have increased by €9.9 million as a result of the reclassification of security deposit payables, which are now included within progressive, operators’ jackpots and security deposits. In addition, for the year ended 31 December 2011, security deposit payables of €5.6 million have been reclassified from trade payables to progressive and other operators’ jackpots within current liabilities.

There has been no impact on the net assets of the Group in the current or prior year as a result of these reclassifications.

NOTE 3 – CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSThe 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 other intangible assets, 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. Estimates and AssumptionsImpairment of goodwillThe Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. 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. Such estimates are based on management’s experience of the business, but actual outcomes may vary. More details including carrying values are included in Note 12.

Amortisation of development costs and other intangible assets and the useful life of property, plant and equipmentIntangible assets and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness.

Changes to estimates can result in significant variations in the amounts charged to the consolidated statement of comprehensive income in specific periods. More details including carrying values are included in Notes 11 and 12.

Fair value of available-for-sale investmentsThe Group determines the fair value of available-for-sale investments that are not quoted using valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rates and estimates for future cash flows. 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.

The methods and assumptions applied, and the valuation techniques used, are disclosed in Note 15.

Share-based paymentsThe Group has a share based remuneration scheme for employees. 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. Those assumptions are described in Note 10 and include, among others, the dividend growth rate, expected share price volatility, expected life of the options and number of options expected to vest.


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NOTE 3 – CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)Estimates and Assumptions (continued)Legal proceedings and contingent liabilitiesManagement regularly monitors the key risks affecting the Group, including the regulatory environment in which the Group operates. 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. In instances where the criteria are not met, a contingent liability may be disclosed in the notes to the financial statements. More details are included in Note 32.

Determination of fair value of intangible assets acquired 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. Further information in relation to the determination of fair value of intangible assets acquired is given in Note 27.

Income taxesThe Group is subject to income tax in jurisdictions in which it is registered and judgment is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. 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. More details are included in Note 8.

Determination of the fair value of contingent considerationThe 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. Further information in relation to the determination of the fair value of contingent consideration is given in Note 26.

The preparation of financial statements 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 statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.

NOTE 4 – SEGMENT INFORMATIONManagement 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.

Management review the performance of the Group by reference to Group-wide profit measures and the revenues derived from six (2011: six) main product groupings:

• Casino• Poker • Bingo• Videobet• Services• Other

The Group-wide profit measures are adjusted net profit and adjusted EBITDA (see Note 5). Management believes the adjusted profit measures represent more closely the underlying trading performance of the business. No other differences exist between the basis of preparation of the performance measures used by management and the figures in the Group financial statements.

There is no allocation of operating expenses, profit measures, assets and liabilities to individual product groupings. Accordingly the disclosures overleaf are provided on an entity-wide basis.


NOTE 4 – SEGMENT INFORMATION (CONTINUED)Revenue by Product

2012 €’000

2011 €’000

Casino 151,745 114,385

Poker 17,840 21,793

Bingo 17,954 15,064

Videobet 10,761 7,769

Services 106,326 43,012

Other 12,878 5,462

Total revenues 317,504 207,485

In 2012, there were three licensees who individually accounted for more than 10% of the total revenue of the Group (2011: two licensees). Revenue from these licensees totalled €162.2 million (2011: €77.6 million).

Geographical Analysis of Revenues by Jurisdiction of Gaming LicenseAnalysis by geographical regions is made according to the jurisdiction of the gaming license of the licensee. This does not reflect the region of the end users of the Group’s licensees whose locations are worldwide.

2012 €’000

2011 €’000

Antigua 102,947 57,090

Gibraltar 80,386 54,776

Alderney 38,214 24,358

Curacao 15,069 14,567

Philippines 38,626 21,391

Rest of World 42,262 35,303

317,504 207,485

Geographical Analysis of Non-Current Assets

2012 €’000

2011 €’000

British Virgin Islands 351,727 439,033

Isle of Man 187,901 75,802

Sweden 19,081 19,167

Cyprus 17,889 14,418

Estonia 7,349 7,020

UK 3,544 5,698

Rest of World 1,744 3,804

589,235 564,942


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NOTE 5 – ADJUSTED ITEMSThe following tables give a full reconciliation between adjusted and actual results:

2012 €’000

2011 €’000

Distribution costs before depreciation and amortisation – actual 156,658 100,830

Employee stock option expenses (1,817) (2,811)

Distribution costs before depreciation and amortisation – adjusted 154,841 98,019

Administrative expenses before depreciation and amortisation – actual 29,630 25,364

Employee stock option expenses (586) (1,867)

Professional fees on acquisitions (496) (1,488)

Admission to premium listing on main market (2,098) –

One-off legal costs related to the litigation with associate – (1,389)

Decline in fair value of available for sale investments – (551)

Total adjusted items (3,180) (5,295)

Administrative expenses before depreciation and amortisation – adjusted 26,450 20,069

Depreciation – distribution costs 6,913 4,537

Depreciation – administrative costs 1,205 827

Amortisation – distribution costs 8,990 7,935

Depreciation and amortisation – adjusted 17,108 13,299

Amortisation of intangibles on acquisitions – distribution costs 26,656 15,838

Amortisation of intangibles in associate 5,729 5,729

Total depreciation and amortisation including amortisation of intangibles in associate 49,493 34,866

EBITDA 181,723 116,818


Professional fees on acquisitions 496 1,488

Admission to a premium listing on the main market 2,098 –

One-off legal costs related to the litigation with associate – 1,389


Adjusted EBITDA 186,720 124,924

Profit for the year – attributable to owners of the parent 86,755 77,696


Professional fees on acquisitions 496 1,488

Admission to a premium listing on the main market 2,098 –

One-off legal costs related to the litigation with associate – 1,389

Amortisation of intangibles on acquisitions including amortisation on investment in associate 32,385 21,567


Movement in deferred and contingent consideration 44,184 6,075

One-off tax credit – (571)

Exchange differences – on deferred consideration – (26)

Adjusted profit for the year – attributable to owners of the parent 168,321 112,847


NOTE 6 – OPERATING PROFITOperating profit is stated after charging:

2012 €’000

2011 €’000

Directors compensation

Short-term benefits of directors 1,821 1,603

Share-based benefits of directors 231 748

Bonuses to executive directors 392 438

2,444 2,789

Auditor’s remuneration

Audit services

Parent company and Group audit 225 204

Audit of overseas subsidiaries 221 138

Total audit 446 342

Non-audit services

Other acquisition and assurance services 357 379

Taxation compliance 22 86

379 465

Development costs (including capitalised development costs of €14.8 million (2011: €9.5 million)) 34,657 22,844

NOTE 7 – FINANCING INCOME AND COSTS

2012 €’000

2011 €’000

A. Finance income

Interest received 71 475

Dividend received from available for sale investments 3,625 3,075

Exchange differences 400 422

4,096 3,972

B. Finance cost

Finance cost – movement in deferred and contingent consideration (44,184) (6,075)

Bank charges and interest paid (3,112) (1,186)

(47,296) (7,261)

Net financing expense (43,200) (3,289)

NOTE 8 – TAXATION

2012 €’000

2011 €’000

Current income tax

Income tax on profits of subsidiary operations 3,562 1,866

Previous year taxes – (571)

Deferred tax (Note 24) (1,461) (338)

Total tax charge 2,101 957


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NOTE 8 – TAXATION (CONTINUED)The tax charge for the year can be reconciled to accounting profit as follows:

2012 €’000

2011 €’000

Profit before taxation 89,030 78,663

Tax at effective rate in Isle of Man – –

Higher rates of current income tax in overseas jurisdictions 3,562 1,866

Adjustments in respect of previous periods – (571)

Effect of deferred tax originating in overseas jurisdictions (1,461) (338)

Total tax charge 2,101 957

The Group is tax registered, managed and controlled from the Isle of Man where the corporate tax rate is set to zero. The majority of profits arise in Isle of Man which is the Company’s country of incorporation. The Group’s subsidiaries are located in different jurisdictions. The subsidiaries are taxed on their residual profit.

The tax credit in 2011 of €0.6 million related to the creation of deferred tax asset in one of the Group’s subsidiaries.

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

NOTE 9 – EARNINGS PER SHAREA. 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 is as follows:

2012 2011

Actual€’000

Adjusted€’000

Actual€’000

Adjusted€’000

Profit for the year attributable to owners of the parent 86,755 168,321 77,696 112,847

Basic (Cents) 30.0 58.1 31.8 46.2

Diluted (Cents) 29.4 57.1 31.4 45.7

Number2012

Number2011

Denominator – basic

Weighted average number of equity shares 289,416,759 244,113,262

Denominator – diluted

Weighted average number of equity shares 289,416,759 244,113,262

Weighted average number of option shares 5,296,536 3,066,593

Weighted average number of shares 294,713,295 247,179,855

As at 31 December 2012, out of the entire share options outstanding of 4,616,691 (2011: 9,716,729) 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. – they are out of the money) and therefore it would not be advantageous for the holders to exercise those options. The total number of options in issue is disclosed in Note 10.


NOTE 10 – EMPLOYEE BENEFITSTotal staff costs comprise the following:

2012 €’000

2011 €’000

Salaries and employee-related costs 98,973 65,630

Employee stock option costs 2,403 4,678

101,376 70,308

Average number of employees

Distribution 2,630 2,145

General and administration 183 110

2,813 2,255

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

• 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.

• 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.

The overall term of the ESOP is five to ten years. These options are settled in equity once exercised. Option prices are either denominated in USD or GBP, depending on the option grant terms.

During the year, the Group amended some of the rules of the Plan. The amendments allow the Group, at the option holders consent, to settle fully vested and exercisable options for cash instead of issuing shares. As disclosed in the remuneration report, some of the executive directors during the year received cash instead of shares.


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NOTE 10 – EMPLOYEE BENEFITS (CONTINUED)At 31 December 2012, options under these schemes were outstanding over:

2012 Number

2011 Number

Shares vested on 30 November 2008 at an exercise price of $2.5 per share 135,734 141,067

Shares vested on 30 November 2008 at an exercise price of £1.45 per share 304,915 410,250

Shares vested on 30 November 2008 at an exercise price of £2.32 per share – 133,334

Shares vested between 1 December 2006 and 6 February 2009 at an exercise price of $4.50 per share 25,000 282,046

Shares vested between 1 December 2006 and 6 February 2009 at an exercise price of £2.55 per share 410,000 610,000

Shares vested between 1 December 2006 and 1 December 2009 at an exercise price of £2.29 per share – 200,000

Shares vested between 28 March 2007 and 28 March 2009 at an exercise price of £2.57 per share – 200,000

Shares vested between 21 June 2007 and 21 June 2009 at an exercise price of $5.75 per share 11,000 11,000

Shares vested between 21 June 2007 and 21 June 2009 at an exercise price of £3.16 per share 60,334 60,334

Shares vested between 11 October 2007 and 11 October 2009 at an exercise price of £1.72 per share – 208,334

Shares vested between 11 December 2007 and 11 December 2009 at an exercise price of $4.35 per share 25,000 65,000

Shares vested between 11 December 2007 and 11 December 2009 at an exercise price of £2.21 per share 182,668 254,669

Shares vested between 31 December 2007 and 31 October 2010 at an exercise price of $7.48 per share – 75,000

Shares vested between 16 May 2008 and 16 May 2010 at an exercise price of $7.50 per share 20,000 20,000

Shares vested between 16 May 2008 and 16 May 2010 at an exercise price of £3.79 per share 890,000 1,143,000

Shares vested between 18 June 2008 and 18 June 2010 at an exercise price of $7.79 per share 8,501 9,468



Shares vested between 31 December 2008 and 31 December 2010 at an exercise price of $7.68 per share 18,000 18,000


Shares vested between 10 October 2008 and 10 October 2011 at an exercise price of £3.51 per share 92,500 112,500

Shares vested between 20 November 2008 and 20 November 2011 at an exercise price of $7.19 per share 30,000 30,000

Shares vested between 20 November 2008 and 20 November 2011 at an exercise price of £3.51 per share – 55,500


Shares vested between 25 April 2009 and 25 April 2012 at an exercise price of £4.35 per share 522,667 522,167

Shares vested between 21 May 2009 and 21 May 2012 at an exercise price of £5.31 per share 500,000 500,000

Shares vested between 28 November 2009 and 28 November 2012 at an exercise price of £3.20 per share 1,311,786 1,502,725

Shares vested on 22 May 2012 at an exercise price of £4.155 per share 740,000 765,000

Shares vested on 22 May 2012 at an exercise price of £4.05 per share – 75,000

Shares vested on 6 November 2012 at an exercise price of £3.7 per share 870,000 1,130,000

Shares vest between 18 April 2012 and 18 April 2013 at an exercise price of £5.12 per share 844,000 1,063,000

Shares vest between 3 June 2012 and 3 June 2013 at an exercise price of £4.84 per share 220,000 220,000

Shares vest between 26 August 2012 and 26 August 2013 at an exercise price of £4.16 per share 225,780 264,725

Shares will vest on 26 August 2013 at an exercise price of £4.16 per share 158,642 180,275

Shares will vest on 10 March 2014 at an exercise price of £3.5225 per share 1,562,850 1,999,950

Shares will vest on 25 August 2014 at an exercise price of £3.0325 per share 100,000 100,000

Shares will vest on 16 December 2014 at an exercise price of £2.3 per share 120,000 120,000

Shares will vest on 23 June 2015 at an exercise price of £3.48 per share 380,000 –

10,111,145 12,843,596

Total number of shares exercisable as of 31 December 2012 is 7,262,253 (2011: 6,220,707). The total fair value of the options that were granted in respect of equity settled schemes for 2012 is €0.6 million (2011: €4.1 million), of which €0.1 million (2011: €1.0 million) has been recognised as an expense in the consolidated statement of comprehensive income.


NOTE 10 – EMPLOYEE BENEFITS (CONTINUED)The following table illustrates the number and weighted average exercise prices of shares options for the ESOP.

2012 2011 2012 2011

Number of options

Number of options

Weighted average

exercise price

Weighted average

exercise price

Outstanding at the beginning of the year 12,843,596 11,592,082 $4.58, £3.59 $4.57, £3.62

Granted during the year 420,000 2,331,650 £3.478 £3.44

Forfeited (1,538,261) (876,434) $6.76, £3.74 £3.87

Exercised (1,614,190) (203,702) $4.44, £2.55 $4.50, £2.22

Outstanding at the end of the year 10,111,145 12,843,596 $4.36, £3.7 $4.58, £3.59

Included in the number of options exercised during the year is 591,668 (2011: nil) where a cash alternative was received.

The weighted average share price at the date of exercise of options was £4.47 (2011: £3.47).

The weighted average fair value of options granted during the year at the date of grant was £1.4124 (2011: £1.78).

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

Expiry date Exercise price2012

Number2011

Number

Between 15 May 2012 and 31 December 2012 Between $7.19 and $7.79 and between £3.30 and £3.96 – 310,333

Between 25 April 2013 and 31 December 2013 $4.35 and between £3.17 and £5.31 357,800 1,323,002

Between 22 May 2014 and 6 November 2014 Between £3.70 and £4.16 – 740,000

1 December 2015 $2.50 and between £1.45 and £2.32 440,649 684,651

Between 6 February 2016 and 11 December 2016 Between $4.35 and $5.75 and between £1.72 and £3.16 714,002 1,891,383

Between 15 May 2017 and 31 December 2017 Between $7.19 and $7.79 and between £3.39 and £3.96 1,200,769 1,314,387

Between 25 April 2018 and 31 December 2018 $4.35 and between £3.17 and £5.31 2,176,653 1,401,890

Between 22 May 2019 and 6 November 2019 Between £3.70 and £4.16 1,610,000 1,230,000

Between 18 April 2020 and 26 August 2020 Between £4.16 and £5.12 1,448,422 1,728,000

Between 10 March 2021 and 16 December 2021 Between £2.30 and £3.52 1,782,850 2,219,950

21 June 2022 £3.48 380,000 –

10,111,145 12,843,596

The fair value of the options granted under the ESOP is estimated as at the date of grant using the Binomial model. The following table gives the assumptions made during the years ended 31 December 2011 and 2012:

For options granted on 11 Mar 2011, 26 August 2011 and 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

For options granted on 21 June 2012

Dividend yield 2.95%

Expected volatility 48.88%

Risk-free interest rate 1.82%

Weighted average exercise price £3.4775

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.


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NOTE 11 – PROPERTY, PLANT AND EQUIPMENT

Computers and gaming

machines€’000

Office furniture and

equipment€’000

Motor vehicles

€’000

Building and Leasehold

improvements €’000

Total€’000

Cost

At 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)

At 31 December 2011 26,567 1,588 328 6,602 35,085

Accumulated depreciation

At 1 January 2011 7,738 495 63 209 8,505

Charge 4,457 176 56 675 5,364

Disposals (262) (70) – – (332)

At 31 December 2011 11,933 601 119 884 13,537

Net Book Value

At 31 December 2011 14,634 987 209 5,718 21,548

Computers and gaming

machines€’000

Office furniture and

equipment€’000

Motor vehicles

€’000

Building and Leasehold

improvements €’000

Total €’000

Cost

At 1 January 2012 26,567 1,588 328 6,602 35,085

Additions 5,764 490 96 1,657 8,007

Acquired through business combinations 26 – – – 26

Disposals (1,403) (97) (121) (202) (1,823)

At 31 December 2012 30,954 1,981 303 8,057 41,295

Accumulated depreciation

At 1 January 2012 11,933 601 119 884 13,537

Charge 7,350 206 72 490 8,118

Disposals (352) (63) (47) (202) (664)

At 31 December 2012 18,931 744 144 1,172 20,991

Net Book Value

At 31 December 2012 12,023 1,237 159 6,885 20,304


NOTE 12 – INTANGIBLE ASSETS

Patents, domain

names and license

€’000Technology IP

€’000

Development costs

€’000

Customer list and affiliates

€’000Goodwill

€’000Total

€’000

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 year 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

Patents, domain

names and license

€’000Technology IP

€’000

Development costs

€’000

Customer list and affiliates

€’000Goodwill

€’000Total

€’000

Cost

As of 1 January 2012 8,941 12,423 34,283 196,957 164,720 417,324

Additions 2,130 – 14,753 – – 16,883

Assets acquired on previous years business combinations – – – – 178 178

Reclassification – 2,300 (2,300) – – –

Assets acquired on business combinations 4,514 3,528 – 400 17,329 25,771

Disposals – (308) – – – (308)

As of 31 December, 2012 15,585 17,943 46,736 197,357 182,227 459,848

Accumulated amortisation

As of 1 January 2012 2,693 4,556 14,918 29,956 – 52,123

Provision 935 3,627 6,787 24,297 – 35,646

Disposals – (308) – – – (308)

As of 31 December 2012 3,628 7,875 21,705 54,253 – 87,461

Net Book Value

As of 31 December 2012 11,957 10,068 25,031 143,104 182,227 372,387

Management believes that domain names, with a carrying value of €0.2 million (2011: €0.2 million) have an indefinite life due to their nature. Amortisation of intangible assets is included in distribution costs.

In accordance with IAS 36, the Group regularly monitors the carrying value of its intangible assets, including goodwill. Goodwill is allocated to eight cash generating units (CGU) (2011: six). Management determines which of those CGU’s are significant in relation to the total carrying value of goodwill as follows:

• Carrying value exceeds 10% of total goodwill; or• Acquisition during the year; or• Contingent consideration exists at the balance sheet date.

Based on the above criteria, management has concluded that the following CGUs are significant:

• PTTS, with a carrying value of €93.4 million (2011: €93.4 million);• Geneity, with a carrying value of €14.8 million (2011: €nil); and• Mobenga, with a carrying value of €15.9 million (2011: €15.7 million).


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NOTE 12 – INTANGIBLE ASSETS (CONTINUED)The recoverable amounts of all the above CGUs have been determined from value in use calculations based on cash flow projections from formally approved budgets covering a four year period to 31 December 2016. Beyond this period, management has applied an annual growth rate of 2% based on the underlying economic environment in which the CGU operates. Management has applied a discount rate to the cash flow projections of 15.5% (2011: 15.5%) for both PTTS and Mobenga, and 15% (2011: nil%) for Geneity.

The results of the review indicated that there was no impairment of goodwill at 31 December 2012. Management has also reviewed the key assumptions and forecasts for the customer lists, brands and affiliates, applying the above same key assumptions. The results of the reviews indicated that there was no impairment of the intangible assets at 31 December 2012.

NOTE 13 – INVESTMENTS IN EQUITY ACCOUNTED ASSOCIATES & JOINT VENTURES

2012

€’0002011

€’000

Investment in equity accounted associates and joint ventures comprise:

A. Investment in William Hill Online 150,692 156,618

B. Investment in Sciplay – 332

C. Investment in International Terminal Leasing 5,344 6,047

156,036 162,997

A. Investment in William Hill OnlineThe investment in William Hill (WH) Online has been accounted for using the equity method in the consolidated financial statements 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. 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. Software license royalty fees charged to WH Online have been recognised as revenues in the Group accounts.

WH Online 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”). Upon exercise of the Option, the Group has the right to receive a portion of the proceeds in WH shares, not exceeding 10% of William Hill Plc’s outstanding share capital at the time of issue. On 1 March 2013, the Group was informed by William Hill Plc that it will exercise its call option to acquire the Group’s 29% stake in WH Online for a total consideration of approximately £424 million.

WH Online 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.

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

€’000

Investment in equity accounted associates at 1 January 2011 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

Income from associate 50,553

Amortisation of intangibles in associate (5,729)

Dividend (50,750)

Investment in equity accounted associates at 31 December 2012 150,692

Management has reviewed the key assumptions and forecasts for the abovementioned assets and the result of the review indicated that there was no impairment of the Group’s investment in WH Online at 31 December 2012.


NOTE 13 – INVESTMENTS IN EQUITY ACCOUNTED ASSOCIATES & JOINT VENTURES (CONTINUED)Aggregated amounts relating to associates are as follows:

2012 €’000

2011 €’000

Total assets 134,856 167,337

Total liabilities 84,936 113,388

Revenues 567,294 369,945

Profit 167,005 122,970

B. Investment in SciplayOn 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.

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

The Group’s loss on the sale was €0.1 million (2011: share of loss of €0.6 million) and has been recognised in the consolidated statement of comprehensive income.

C. Investment in International Terminal LeasingOn 8 March 2011, the Group entered into an agreement with Scientific Games to form a partnership called International Terminal Leasing (ITL) which relates to the strategic partnership with Scientific Games Corporation.

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. However, the Group’s share of profit is expected to be between 20%-50%.

The Group received a return on initial investments of €0.9 million during the year (2011: €1.7 million).

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

€’000

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

Share of profit in joint venture 156

Return of initial investment (859)

Investment in joint venture at 31 December 2012 5,344

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

2012 €’000

2011 €’000

Total assets 27,215 28,764

Total liabilities 614 226

Revenues 4,388 2,881

Profit 634 400


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NOTE 14 – DEFERRED AND CONTINGENT CONSIDERATION

Note2012

€’0002011

€’000

Non-current deferred consideration consists:

Acquisition of PT Turnkey Services Limited 27 26,735 41,752

26,735 41,752

Current deferred consideration consists:

Acquisition of PT Turnkey Services Limited 27 69,015 33,591

Acquisition of Intelligent Gaming Systems Limited 734 –

69,749 33,591

Non-current contingent consideration consists:

Acquisition of Intelligent Gaming Systems Limited 27 400 709

Acquisition of PT Turnkey Services Limited 27 – 98,643

Acquisition of Mobenga AB Limited 27 15,426 11,633

15,826 110,985

Current contingent consideration consists:

Acquisition of Intelligent Gaming Systems Limited 27 – 929

– 929

NOTE 15 – AVAILABLE-FOR-SALE INVESTMENTS

2012 €’000

2011 €’000

Available-for-sale investments comprise:

A. Investment in AsianLogic 12,513 2,054

B. Investment in Sportech PLC 17,148 10,322

C. Investment in PhilWeb 5,672 –

35,333 12,376

2012 €’000

2011 €’000

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

A. Investment in AsianLogic 10,459 –


C. Investment in PhilWeb (2,058) –

15,227 1,444

The fair value of quoted investments is based on published market prices. The fair value of unquoted investments is based on valuation techniques as described below.

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

A. As at 3 July 2009, AsianLogic shares were delisted from AIM. At that date, the share price was £0.245. The directors do not consider there to have been any further impairment in the investment since 3 July 2009.

The Group has increased the carrying value of the investment in AsianLogic to €12.5 million (2011: €2.1 million). The valuation technique used to determine the fair value as at 31 December 2012 was the dividend income approach. In valuing the investment, management applied a discount rate of 28% to future dividend income, with an annual growth rate of 2%. The increase of €10.5 million has been recognised in equity, within the available-for-sale reserve.

During the year, the Group received a dividend of €3.6 million (2011: €3.1 million) that has been reflected in the consolidated statement of comprehensive income as finance income.


NOTE 15 – AVAILABLE-FOR-SALE INVESTMENTS (CONTINUED)B. 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 €11.3 million. As at 31 December 2012 the market value of this investment was €17.1 million (2011: €10.3 million) and the increase of €6.8 million has been recognised directly in equity, within the available-for-sale reserve. During the prior year the movement of €1.4 million represented an increase in the investment of €2.0 million, recognised in equity, and an impairment in the first half of 2011 of €0.6 million, which was recognised in the consolidated statement of comprehensive income.

Roger Withers, chairman of the Group during the year, was appointed as non-executive chairman of Sportech PLC in 2011. Mor Weizer was appointed as a non-executive director of Sportech PLC on 23 March 2011.

C. On 30 October 2012, the Group acquired a 1.75% stake in PhilWeb, a leading gaming technology provider in the Asia Pacific Region, for a total consideration of €7.7 million. As at 31 December 2012, the market value of this investment was €5.7 million. An amount of €2.0 million has been recognised directly in equity, within the available-for-sale reserve.

As at 12 March 2013, the closing price of PhilWeb shares was PHP 14.56 compared to PHP 12.56 as at 31 December 2012. This has resulted in an increase in the fair value of the available for sale investments of €1.0 million since the balance sheet date. This increase in value is a non-adjusting post balance sheet event and has not therefore been accounted for as at 31 December 2012.

NOTE 16 – OTHER NON-CURRENT ASSETS

2012 €’000

2011 €’000

Loan to customer 221 221

Loan to affiliate 2,255 1,845

Rent and car lease deposits 642 743

Other 2,057 11

5,175 2,820

NOTE 17 – TRADE RECEIVABLES

2012 €’000

2011 €’000

Customers 45,981 26,531

Related parties (Note 28) 1,803 4,408

47,784 30,939

NOTE 18 – OTHER RECEIVABLES

2012 €’000

2011 €’000

Prepaid expenses 6,120 4,871

VAT and other taxes 2,064 3,643

Short-term deposits 6,490 2,106

Advances to suppliers 389 152

Related parties (Note 28) 6,203 2,871

Loan to customer 530 530

Loan to affiliate 3,390 4,700

Other receivables 1,374 1,355

26,560 20,228


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NOTE 19 – CASH AND CASH EQUIVALENTS

2012 €’000

2011 €’000

Cash at bank 96,473 111,492

Deposits 24,407 53,340

120,880 164,832

The Group held cash balances which include monies held on behalf of operators in respect of operators’ jackpot games and poker operation. The balances held at the year-end are set out below and the liability is included in trade payables:

2012 €’000

2011 €’000

Funds attributed to jackpots 15,339 20,491

Poker security deposits 16,268 15,562

Other 430 272

32,037 36,325

NOTE 20 – SHAREHOLDERS’ EQUITY

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

2012 Number of

shares

2011 Number of

shares

Authorised N/A(*) N/A(*)

Issued and paid up 290,236,870 289,314,348

(*) The Group has no authorised share capital but is authorised under its memorandum and article of association to issue up to 1,000,000,000 shares of no par value. B. Treasury sharesOn 25 June 2012 the Group cancelled all of the 100,000 ordinary shares of no par value held by the Company in treasury. These shares were purchased in June 2011. The weighted average cost of own shares held in treasury was £3.28 per share.

C. Share options exercisedDuring the year 1,022,522 (2011: 203,702) share options were exercised.

D. Distribution of dividendIn May 2012, the Group distributed €47,889,585 as a final dividend for 2011.

In October 2012, the Group distributed €22,550,631 as an interim dividend for 2012.

E. ReservesThe following describes the nature and purpose of each reserve within owner’s equity: Reserve Description and purpose

Additional paid in capital Share premium (i.e. amount subscribed for share capital in excess of nominal value)

Available-for-sale reserve Changes in fair value of available-for-sale investments (Note 15)

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


NOTE 21 – NON CURRENT LIABILITIES

2012 €’000

2011 €’000

Long-term trade payables – 756

Severance pay 215 667

215 1,423

NOTE 22 – LOANS AND BORROWINGS

2012 €’000

2011 €’000

Current bank borrowings 37,970 13,787

Non-current bank borrowings 31,250 13,746

69,220 27,533

The loans are repayable in eight quarterly instalments and two annual instalments starting July 2012.

The rate at which the liabilities are payable is a fixed-rate plus movements in the Euribor and Euro Libor rates.

The Group has undrawn committed borrowing facilities available at 31 December 2012 of €35.0 million.

NOTE 23 – TRADE PAYABLES

2012 €’000

2011 €’000

Suppliers 12,259 8,577

Customer liabilities 1,373 3,293

Related parties (Note 28) 23 75

Other 867 1,111

14,522 13,056

NOTE 24 – DEFERRED TAX LIABILITYThe deferred tax liability is due to temporary differences on the acquisition of certain businesses.The movement on the deferred tax liability is as shown below:

2012 €’000

2011 €’000

At the beginning of the year 5,287 1,950

Arising on the acquisitions during the year (Note 26) 1,406 3,675

Reversal of temporary differences, recognised in the consolidated statement of comprehensive income ( 1,461) ( 338)

5,232 5,287

NOTE 25 – OTHER PAYABLES

2012 €’000

2011 €’000

Payroll and related expenses 11,750 10,262

Accrued expenses 7,165 4,104

Related parties (Note 28) 506 –

Other payables 3,040 1,534

22,461 15,900


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NOTE 26 – ACQUISITIONS DURING THE YEARA. Acquisition of Geneity LimitedOn 23 January 2012, the Group acquired 100% of the shares of Geneity Limited (“Geneity”). Geneity is a provider of e-gaming software products, focused primarily on the sportsbook and lottery sectors.

The Group paid an initial consideration, including working capital adjustments, of €15.1 million (£11.4 million) in cash of which €4.7 million (£4.0 million) is held in escrow for 30 months. A further €4.7 million (£4.0 million) was also being held in escrow to be released subject to certain agreed deliverables being met. These deliverables were met in September 2012.

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

Book value prior to

acquisition €’000

Adjustments €’000

Fair value on acquisition

€’000

Property, plant and equipment 26 – 26

Intangible assets 65 3,864 3,929

Trade and other receivables 654 – 654

Cash and cash equivalents 1,657 – 1,657

Deferred tax liability (138) (966) (1,104)

Trade payables (110) – (110)

Net identified assets 2,154 2,898 5,052

Goodwill 14,805

Fair value of consideration 19,857

Cash purchased (1,657)

Net cash paid 18,200

Adjustments to fair value include the following:

Amount €’000

Amortisation%

IP Technology 3,464 8

Customer list 400 8

Total intangible assets 3,864

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 accordance with IAS36, the Group will regularly monitor the carrying value of its interest in the Geneity business.

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

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

• 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 discount rate assumed is equivalent to the WACC for the IP Technology and the customer relationships; and• The growth rates and attrition rates were based on market analysis.

Management has disclosed neither Geneity’s contribution to Group profit since the acquisition date nor the impact the acquisition would have had on the Group’s revenue and profits if it occurred on 1 January 2012, because the amounts are not material.


NOTE 26 – ACQUISITIONS DURING THE YEAR (CONTINUED)B. Acquisition of Juego Online EADOn 27 December 2012, the Group acquired 100% of the shares of Juego Online EAD (“Juego”). Juego is a provider of online gaming services for the Spanish market.

The Group paid a consideration, including working capital adjustment, of €10.9 million. €6.2 million was paid in cash and the remaining amount was paid by conversion of a prior year loan to Juego’s ultimate parent company.

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

Book value prior to

acquisition€’000

Adjustments€’000

Fair value on acquisition

€’000

Intangible assets – 4,514 4,514

Trade and other receivables 4,553 – 4,553

Cash and cash equivalents 174 – 174

Trade payables (443) – (443)

Deferred tax liability – (451) (451)

Net identified assets 4,284 4,063 8,347

Provisional goodwill 2,523

Fair value of consideration 10,870

Conversion of prior year loan (4,700)

Cash purchased (174)

Net cash paid 5,996

Adjustments to fair value include the following:

Amount€’000

Amortisation%

License 4,514 10

The main factors leading to the recognition of goodwill are time to market advantage and the option for the renewal of the license in the future. In accordance with IAS36, the Group will regularly monitor the carrying value of its interest in the Juego business.

The key assumptions used by management to determine the value in use of the gaming license within Juego business are as follows:

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

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

• The discount rate assumed is equivalent to the WACC; and• The growth rates and attrition rates were based on market analysis.

Management have not disclosed Juego’s contribution to Group profit since the acquisition date nor have they disclosed the impact the acquisition would have had on the Group’s revenue and profits if it occurred on 1 January 2012, because the amounts are not material.

NOTE 27 – ACQUISITIONS IN PRIOR YEARA. Acquisition of Intelligent Gaming Systems LimitedOn 26 January 2011, the Group acquired 100% of the shares of Intelligent Gaming Systems Limited (“IGS”). IGS is a provider of software-based casino management systems to land-based casinos.

The Group paid an initial consideration of €2.8 million (£2.5 million) in cash, and additional contingent consideration of up to €3.5 million (£3.0 million) was payable in respect of the adjusted PBT performance in 2011-2013 at the start of each following year. During the year, the Group signed a deed of variation to vary the conditions of the contingent consideration. It was agreed that a sum of €1.4 million (£1.2 million) will be paid in two instalments, according to the original terms and the remaining contingent consideration amount is now based on adjusted income and product deliverables. The movement in contingent consideration in the year of €0.4 million is included in finance costs.


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NOTE 27 – ACQUISITIONS IN PRIOR YEAR (CONTINUED)B. Acquisition of PT Turnkey Services LimitedOn 10 March 2011 the Group entered into an agreement to purchase 100% of the issued share capital of PT Turnkey Services Limited (“PTTS”) from Worldwide Online Enterprises Limited (“WOE”). 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.

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

The PTTS Group provides marketing and ancillary services to operators of online gaming businesses, and comprises four separate service offerings – marketing, operations, payment advisory and network management.

In consideration, the Group paid an initial amount of €140 million as follows:

€’000

Working capital adjustment 14,800

Paid in 2011 45,000

Paid in 2012 as early settlement 76,000

Discounting of initial consideration 4,200

Total initial consideration 140,000

In addition to the initial amount, the Group will pay a further €140 million contingent consideration, which became payable during the year, and thus treated as deferred consideration as at 31 December 2012, after meeting the accelerated payment mechanism. The acceleration has occurred by virtue of PTTS having achieved an annualised adjusted EBITDA in excess of €40 million by reference to its actual performance for the period ended 30 June 2012.

In accordance with the original acquisition terms, the deferred consideration is payable in four non-interest bearing instalments over the following 18 months from the 31 July 2012 as detailed in Note 14. The movement in fair value of contingent and deferred consideration in the year of €39.1 million is included in finance costs. The finance cost related to initial consideration in the year amounts to €0.7 million.

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

Immediately prior to Completion, the Group acquired the Intellectual property and Technology (“IP Technology”) of Mobenga for cash consideration of €1 million. An initial consideration, including working capital adjustments, of €8.2 million was paid in cash and additional contingent consideration of up to €15.8 million may be payable in the first quarter of 2014.

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 computed fair value at the balance sheet date is €15.4m (2011: €11.6m), and the undiscounted range of possible payments is between €nil and €15.8 million. The movement in contingent consideration in the year of €3.8 million is included in finance costs.

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

The total consideration of €27.4 million (£23.0 million) was paid in cash, of which €8.9 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. If such conditions are not satisfied, some of the funds held in escrow may be repaid back to the Group.

E. Acquisition of S-Tech LimitedOn 24 November 2011 the Group acquired 85% of the shares of S-Tech Limited (“S-Tech”), a live games provider in Asia. As of the purchase date S-Tech had net liabilities and therefore the consideration paid was the $1 par value of 85 shares.

During the year, the Group recognised a non-controlling interest of €0.2 million (2011: €nil) owing to the 15% minority shareholder.


NOTE 28 – RELATED PARTIES AND SHAREHOLDERSParties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party making financial or operational decisions, or if both parties are controlled by the same third party.

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 27b). Netplay TV PLC, Skywind Holding Limited (“Skywind”) and Anise Development Limited (“Anise”) are related by virtue of a common significant shareholder.

Sportech PLC is related by virtue of common non-executive directors. WH Online, Sciplay and International Terming Leasing (ITL) are associates of the Group.

The following transactions arose with related parties:

2012€’000

2011€’000

Revenue including income from associate

Sportech 1,311 167

Skywind 120 –

Netplay TV PLC 3,366 2,266

William Hill Online 82,806 58,497

Share of profit (loss) in joint venture

ITL 155 72

Sciplay (164) (618)

Operating expenses

Gamepark Trading Limited – 95

Tech Corporation – 136

800pay Ltd – 63

Anise 538 –

Skywind 3,333 –

Additions to property, plant and equipment

Anise 396 –

The following are year-end balances: Tech Corporation – 43

800pay Ltd – 32

Total related party payables – 75

Sciplay – 39

Skywind 20 –

Netplay TV PLC 484 270

Sportech 31 73

William Hill Online 7,471 6,897

Total related party receivables 8,006 7,279

Sportech PLC (Note 15b) 17,148 10,322

Total investment in related party 17,148 10,322

The details of key management compensation (being the remuneration of the directors) are set out in Note 6.


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NOTE 29 – SUBSIDIARIES Details of the Group’s principal subsidiaries as at the end of the year are set out below:

Name Country of incorporation

Proportion of voting rights and ordinary share capital held Nature of business

Playtech Software Limited 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 Limited Israel 100% Marketing and advertising

Video B Holding Limited 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 Limited Isle of Man 100% Management

Evermore Trading Limited British Virgin Islands 100% Holding company

Genuity Services Limited British Virgin Island 100% Holder of investment in WH Online

Playtech Services (Cyprus) Limited Cyprus 100% Activates the ipoker Network in regulated markets. Owns the intellectual property of GTS, Ash and Geneity businesses

VB (Video) Cyprus Limited Cyprus 100% Trading company for the Videobet product to Romanian companies

Techplay S.A. Software Limited Israel 100% Develops online software

Technology Trading IOM Limited Isle of Man 100% Owns the intellectual property rights of Virtue Fusion business

Gaming Technology Solutions Limited

UK 100% Holding company of VS Gaming and VS Technology

VS Gaming Limited UK 100% Develops software and casino games

VS Technology Limited UK 100% Develops EdGE platform

Virtue Fusion (Alderney) Limited Alderney 100% Online bingo and casino software provider

Virtue Fusion CM Limited UK 100% Chat moderation services provider to end users of VF licensees

VB CMS OU Estonia 100% Develops software for fixed odds betting terminals and casino machines

Playtech Software (Alderney) Limited

Alderney 100% To hold the Company’s Alderney Gaming license

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 and Bingo network for Spain

PT Marketing Services Limited British Virgin Islands 100% Marketing services to online gaming operators

PT Operational Services Limited British Virgin Islands 100% Operational and hosting services to online gaming operators

Tech Hosting Limited Alderney 100% Alderney Hosting services

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

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


Name Country of incorporation

Proportion of voting rights and ordinary share capital held Nature of business

S-Tech Limited British Virgin Islands and 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 and cashier to online gaming operators

PT Processing EU Advisory Limited Cyprus 100% Advisory services for processing and cashier for EU online gaming operators

PT Network Management Limited British Virgin Islands 100% Manages the ipoker network

Playtech Mobile (Cyprus) Limited Cyprus 100% Holds the IP of Mobenga AB

Playtech Holding Sweden AB Limited

Sweden 100% Holding Company of Mobenga AB

Mobenga AB Limited Sweden 100% Mobile sportsbook betting platform developer

Ash Gaming Limited UK 100% Develops interactive gambling and betting games

Geneity Limited UK 100% Develops Sportsbook and Lottery software

Factime Limited Cyprus 100% Holding company of Juego

Juego Online EAD Bulgaria 100% Gaming operator. Holds a license in Spain

PlayLot Limited British Virgin Islands 100% Distributing lottery software

NOTE 30 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENTThe Group is exposed to a variety of financial risks, which results from its financing, operating and investing activities. 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. The Group’s financial instruments are its cash, available-for-sale financial assets, trade receivables, loan receivables, bank borrowings, accounts payable and accrued expenses. The main purpose of these financial instruments is to raise finance for the Group’s operation. The Group actively measures, monitors and manages its financial risk exposures by various functions pursuant to the segregation of duties and principles. The risks arising from the Group’s financial instruments are credit risk and market price risk, which include interest rate risk, currency risk and equity price risk. The risk management policies employed by the Group to manage these risks are discussed below.

A. Interest rate riskInterest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group’s income and operating cash flows are substantially independent of changes in market interest changes. The management monitors interest rate fluctuations on a continuous basis and acts accordingly.

Where the Group has generated a significant amount of cash, it will invest in higher earning interest deposit accounts. These deposit accounts are short term and the Group is not unduly exposed to market interest rate fluctuations.

During the year the Group advanced loans to affiliates and customers for a total amount of €2.3 million (2011: €5.0 million). The interest on the loans is 5%.

During the year the Group drew down €75.0 million from its available credit facilities (2011: €5.0 million). The rate at which the liabilities are payable is a fixed rate plus movements in the Euribor and Euro Libor rates.

The loans are repayable in monthly instalments.

A 1% change in deposit interest rates would impact on the profit before tax by €23,000.

A 1% change in Euribor and Euro Libor interest rates would impact on the profit before tax by €750,000.

As at 31 December 2012 the Group holds undrawn credit facilities of €35.0 million (2011: €82.6 million).

NOTE 29 – SUBSIDIARIES (CONTINUED)


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NOTE 30 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)B. Credit riskCredit 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 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.

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. 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.

Wherever possible and commercially practical the Group invests cash with major financial institutions that have a rating of at least A- as defined by Standard & Poors. 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 balances are kept to a minimum and typically do not exceed €1 million at any time during the monthly payment cycle. Group holds approximately 30% of its funds in financial institutions below A- rate (2011: 14%).

Total€’000

Financial institutes

with A- and above rating

€’000

Financial institutes

below A-rating

€’000

At 31 Dec 2012 120,880 84,710 36,170

At 31 Dec 2011 164,832 141,463 23,369

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

Total€’000

Not past due€’000

1-2 months overdue

€’000

More than 2 months past

due€’000

At 31 Dec 2012 47,784 27,840 15,788 4,156

At 31 Dec 2011 30,939 20,048 7,920 2,971

The above balances relate to customers with no default history.

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

2012€’000

2011€’000

Provision at the beginning of the year 1,829 121

Charged to income statement 29 2,019

Utilised (1,029) (311)

Provision at end of year 829 1,829

Related party receivables included in Note 17 are not past due.

C. Currency riskCurrency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk arises because the Group has operations located in various parts of the world. However, the functional currency of those operations is the same as the Group’s primary functional currency (euro) and the Group is not substantially exposed to fluctuations in exchange rates in respect of assets held overseas.

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

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


NOTE 30 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)D. Equity price riskThe Group’s balance sheet is exposed to market risk by way of holding some investments in other companies on a short-term basis (Note 15). 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 directors believe that the exposure to market price risk is acceptable in the Group’s circumstances.

The Group’s balance sheet at 31 December 2012 includes available for sale investments with a value of €35.3 million which are subject to fluctuations in the underlying share price.

A change of 1% in share price will have an impact of €0.4 million on the consolidated statement of comprehensive income and the fair value of the available for sale investments will change by the same amount.

E. Capital disclosuresThe Group seeks to maintain a capital structure which enables it to continue as a going concern and which supports its business strategy. The Group’s capital is provided by equity and debt funding. The Group manages its capital structure through cash flow from operations, returns to shareholders primarily in the form of dividends and the raising or repayment of debt.

The Group has net cash and cash equivalents at the balance sheet date of €52.1 million (2011: €137.3 million), which includes loans and borrowings of €68.8 million (2011: €27.5 million). Accordingly, management do not believe that there are significant capital risks.

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

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

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

Total€’000

Within 1 year€’000

1-2 years€’000

2-5 years€’000

2012

Trade payables 14,522 14,522 – –

Loans and borrowings 69,220 37,970 31,250 –

Other accounts payable 22,461 22,461 – –

Progressive, operators’ jackpots and security deposits 31,607 31,607 – –

Deferred consideration 98,000 70,000 28,000 –

Contingent consideration 16,950 737 413 15,800

Other non-current liabilities 424 – – 424

2011

Trade payables 13,056 13,056 – –

Loans and borrowings 27,533 13,787 13,746 –

Other accounts payable 15,900 15,900 – –

Progressive, operators’ jackpots and security deposits 36,053 36,053 – –

Deferred consideration 80,194 35,195 45,000 –

Contingent consideration 131,331 929 768 129,634

Other non-current liabilities 1,423 – 756 667


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NOTE 30 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)G. Total financial assets and liabilitiesThe fair value together with the carrying amount of the financial assets and liabilities shown in the balance sheet are as follows:

2012 €’000

Fair Value

2012 €’000

Carrying amount

2011 €’000

Fair Value

2011 €’000

Carryingamount

Cash and cash equivalent 120,880 120,880 164,832 164,832

Available for sale investments 35,333 35,333 12,376 12,376

Other assets 79,619 79,619 52,575 52,575

Deferred consideration 95,750 95,750 75,343 75,343

Contingent consideration 16,560 16,560 111,914 111,914

Loan and borrowings 69,220 69,220 27,533 27,533

Other liabilities 56,796 56,796 56,500 56,500

Included in available for sale investments is €22.8 million and €12.5 million measured at fair value using level 1 and level 2 respectively. Contingent consideration of €16.6 million is measured at fair value using level 3 in accordance with IAS 39. These are the Group’s only financial assets and liabilities which are measured at fair value.

NOTE 31 – POST BALANCE SHEET EVENTSOn 1 March 2013, Playtech was informed by the board of William Hill Plc (“William Hill”) that it intended to exercise its call option to acquire Playtech’s 29% stake in William Hill Online for a total consideration of approximately £424 million. The Group will continue to be entitled to a proportionate share of the FY2013 profits of William Hill Online, until the date of completion.

NOTE 32 – CONTINGENT LIABILITIESThe Group is not a gaming operator and does not provide gaming services to players. 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.

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

NOTE 33 – OPERATING LEASE COMMITMENTSThe Group has a variety of leased properties. The terms of property leases vary from country to country, although they tend to be tenant repairing within rent reviews every two to five years and many have break clauses.

The total future value of minimum lease payments is due as follows:

2012 €’000

2011 €’000

Not later than one year 5,246 2,887

Later than one year and not later than five years 13,380 7,312

Later than five years 10,184 2,956

28,810 13,155


Note2012

€’0002011

€’000

NON-CURRENT ASSETS

Property, plant and equipment 87 84

Intangible assets 261 290

Investments 1 208,642 208,543

Available for sale investments 2 29,661 12,376

Other non-current assets 241 7

238,892 221,300

CURRENT ASSETS

Trade and other receivables 3 275,994 275,229

Cash and cash equivalents 4 32,096 84,757

308,090 359,986

TOTAL ASSETS 546,982 581,286

EQUITY

Additional paid in capital 310,469 307,853

Available for sale reserve 19,280 1,995

Retained earnings 29,539 52,593

Equity attributable to equity holders of the parent 5 359,288 362,441

NON CURRENT LIABILITIES



Contingent consideration 7 – 98,643

57,985 154,141

CURRENT LIABILITIES


Trade and other payables 8 22,724 17,326


129,709 64,704

TOTAL EQUITY AND LIABILITIES 546,982 581,286

Parent Company Financial StatementsCompany Balance Sheet As at 31 December 2012

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NOTE 1 – INVESTMENTS

2012 €’000

2011 €’000

Investment in subsidiary undertakings – cost 208,642 208,543

Details of investments in subsidiary undertakings are as follows:

Subsidiaries Country of incorporation Activity Holding (%)

Playtech Software Limited British Virgin Islands Main trading company of the Group, owns the intellectual property rights and licenses the software to customers

100%

Video B Holding Limited British Virgin Islands Trading company for Videobet software, owns the intellectual property rights of Videobet and licenses it to customers

100%

PTVB Management Limited Isle of Man Management 100%

Playlot Limited British Virgin Islands Distributing lottery software 100%

Trading Technology IOM Ltd Isle of Man Owns the intellectual property rights of Virtue Fusion business 100%

PT Turnkey Services Limited British Virgin Islands Holding Company of the Turnkey Services Group 100%

Playtech Holding Sweden AB Sweden Holding company of Mobenga AB 100%

NOTE 2 – AVAILABLE FOR SALE INVESTMENTS

2012 €’000

2011 €’000

Available for sale investments comprise:

A. Investment in AsianLogic 12,513 2,054


29,661 12,376

2012 €’000

2011 €’000

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

A. Investment in AsianLogic 10,459 –


17,285 1,444

NOTE 3 – TRADE AND OTHER RECEIVABLES

2012 €’000

2011 €’000

Other receivables 284 832

Amounts due from subsidiary undertakings 275,710 274,397

275,994 275,229

Notes to the Company Financial StatementsFor the year ended 31 December 2012


NOTE 4 – CASH AND CASH EQUIVALENTS

2012 €’000

2011 €’000

Cash at bank 20,977 44,906

Deposits 11,119 39,851

32,096 84,757

NOTE 5 – SHAREHOLDERS’ EQUITYA. Share CapitalShare capital is comprised of no par value shares as follows:

2012 Number of

Shares

2011 Number of

Shares

Authorised N/A(*) N/A(*)

Issued and paid up 290,236,870 289,314,348

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

B. Treasury sharesOn 25 June 2012 the Group cancelled all of the 100,000 ordinary shares of no par value held by the Company in treasury. These shares were purchased in June 2011. The weighted average cost of own shares held in treasury was £3.28 per share.

C. Share option exercisedDuring the year 1,022,522 (2011: 203,702) share options were exercised.

D. Distribution of DividendIn May 2012, the Group distributed €47,889,585 as a final dividend for 2011.

In October 2012, the Group distributed €22,550,631 as an interim dividend for 2012.

E. ReservesThe following describes the nature and purpose of each reserve within owner’s equity:

Reserve Description and purpose

Additional paid in capital Share premium (i.e. amount subscribed for share capital in excess of nominal value)

Available-for-sale reserve Changes in fair value of available-for-sale investments (Note 15)

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

NOTE 6 – LOANS AND BORROWINGS

2012 €’000

2011 €’000

Current bank borrowings 37,970 13,787

Non-current bank borrowings 31,250 13,746

69,220 27,533

The loans are payable in eight quarterly instalments and two annual instalments starting July 2012.The rate at which the liabilities are payable is a fixed rate plus movements in the Euribor and Euro Libor rates.

The Company has undrawn committed borrowing facilities available at 31 December 2012 of €35.0 million.

Notes to the Company Financial Statements (continued)For the year ended 31 December 2012

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NOTE 7 – DEFERRED AND CONTINGENT CONSIDERATION

2012 €’000

2011 €’000

Non-current deferred consideration consists:

Acquisition of PT Turnkey Services Limited 26,735 41,752

Current deferred consideration consists:

Acquisition of PT Turnkey Services Limited 69,015 33,591

Non-current contingent consideration consists:

Acquisition of PT Turnkey Services Limited – 98,643

NOTE 8 – TRADE AND OTHER PAYABLES

2012 €’000

2011 €’000

Suppliers and accrued expenses 2,418 1,499

Payroll and related expenses 5,970 5,816

Amounts owed to Group undertakings 14,336 10,011

22,724 17,326


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Notes


Copyright

The Avengers: front cover, front flap © MARVEL

Spiderman: front cover © MARVEL

Pink Panther: front flap TM & © 1964 - 2013 Metro-Goldwyn-Mayer Studios Inc. All rights reserved.

The Six Million Dollar Man: front flapTM & © 2013 Universal Studios. Licensed by NBCUniversal Television Consumer Products Group 2013. All Rights Reserved.

Captain America: page 13 © MARVEL

Hot 50: page 53© 2012 Gaming Intelligencewww.GamingIntelligence.com

2012 €m

2011 €m

2010 €m

2009 €m

2008€m

2007 €m

Income statement

Total revenues 317.5 207.5 142.3 114.8 111.5 65.7

Associate income (William Hill Online) 50.6 36.1 30.8 22.5 – –

Gross income 368.1 243.6 173.1 137.3 111.5 65.7

Adjusted EBITDA 186.7 125.5 103.1 93.7 74.7 43.0

Adjusted net profit 168.3 112.8 93.2 89.4 78.6 43.9

Balance sheet

Non-current assets 589.2 564.9 292.8 252.0 235.2 42.4

Current assets 195.2 206.1 91.3 75.1 44.4 88.4

Current liabilities 181.9 110.2 64.3 32.1 17.7 28.6

Non-current liabilities 88.4 182.1 19.8 25.1 31.7 22.1

Net assets 514.2 478.7 300.0 269.9 230.2 80.1

Equity

Additional paid-in capital 310.5 307.9 189.7 183.6 180.1 39.1

Available-for-sale reserve 17.2 2.0 – 1.0 – 0.2

Retained earnings 186.4 168.9 110.3 85.3 50.1 40.9

Statistics

Basic adjusted EPS (in euro cents) 58.1 46.2 38.5 37.3 34.5 20.4

Diluted adjusted EPS (in euro cents) 57.1 45.7 37.1 36.0 33.4 19.5

Dividend per share (in euro cents) 23.2 16.5 19.0 18.3 15.2 10.1

Share price low/high 277.3p/432.7p 215.5p/420p 390p/548p 291.75p/482p 305p/550p 242p/412.5p

Five-Year Financial Summary

Registered Office 2nd Floor St George’s Court Upper Church Street Douglas Isle of Man IM1 1EE

StockbrokerCanaccord Genuity 9th Floor 88 Wood Street London EC2V 7QR

Auditors BDO LLP 55 Baker Street London W1U 7EU

Financial PR Pelham Bell Pottinger 5th Floor Holborn Gate 330 High Holborn London WC1V 7QD

Solicitors Berwin Leighton Paisner LLP Adelaide House London Bridge London EC4R 9HA

Registrars Computershare Investor Services (Isle of Man Limited) International House Castle Hill Victoria Road Douglas Isle of Man IM2 4RB

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