Interim results

RNS Number : 6595R

Playtech Limited

26 August 2010

 



Playtech Ltd

("Playtech" or the "Company")

Interim Results for the six months ending 30 June 2010

STRONG FIRST HALF PERFORMANCE; POSITIVE OUTLOOK SUPPORTED BY LAUNCH OF NEW NETWORKS AND RECENT LICENSEE WINS

Playtech (AIM: PTEC), the international designer, developer and licensor of software for the online, mobile and land-based gaming industry, today announces its unaudited interim results for the six months ended 30 June 2010.

Financial Highlights

§ Gross income* up 31% to €87.9 million (2009: €66.9 million)

§ Adjusted EBITDA** increased by 20% to €54.2 million (2009: €45.3 million) reflecting margin of 62% on gross income (2009: 68%)

§ Total revenues up by 29% to €72.9 million (2009: €56.7 million)

§ Net profit after tax of €37.0 million (2009: €32.5 million) an increase of 14%

§ Cash generated from operating activities and sums received from William Hill totalled €60.8 million (2009: €37.4 million)

§ Adjusted basic EPS** of 19.9 € cents per share (2009: 18.0 € cents per share)

§ Interim Dividend of 9.4 € cents per share, an increase of 6% on the previous year

(*)   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, and cash expenses relating to professional costs on acquisitions (see reconciliation in Financial and Operating Overview below)

Operational Highlights

§ Strategic partnerships with Scientific Games and Sportech announced in January position Playtech for opportunities in newly regulating markets, including the US

§ H1 launches of Italian bingo and French poker networks increases presence in key new regulated markets, along with launch of Olympic Casino

§ Major licensees on target to launch in H2 include Betfair flash casino (Q3), RAY in Finland (Q4); and in Q1 2011, Casino Gran Madrid.

§ Acquisition of Virtue Fusion in February 2010 positions Playtech as the leading B2B bingo network provider, with pipeline of new licensee prospects in UK and internationally

§ Videobet achieves critical mass through partnership with Global Draw and new agreement with Ladbrokes for 7,600 machines

Corporate initiatives

§ Board strengthened through appointment of two new experienced non-executives and UK Corporate Governance Code compliant in terms of composition and independence

§ Search for a new CFO at advanced stage

§ Work necessary to achieve a move to the Main List underway. 

Current trading

In August we have seen gross royalties up more than 4% over July, with casino up over 5% and both poker and bingo in positive territory. As a result our daily activity metrics have improved on those stated in our Q2 KPI announcement.

Daily activity for the first 55 days of Q3/10 is more than 12% ahead of Q3/09 on an absolute basis and more than 30% ahead of Q3/09 on a like for like basis excluding France. Activity declined by 6% compared to Q2/10 on the same like for like basis reflecting the combined impact of the closing stages of the football World Cup and normal seasonal slowdown. On an absolute basis, including France, Q3/10 is 16% below the daily average of the previous quarter.

With Betfair set to provide incremental casino revenues, the football season beginning and the holiday season drawing to a close, we expect to benefit from a further pickup in activity.

Roger Withers, Non-executive Chairman, said:

"We have enjoyed a strong trading performance in the first half. Regulatory change across Europe is transforming the market dynamics and opens up many new opportunities.

Although the restrictions of the newly regulated French market will, as anticipated, impact revenues in the second half, we have a strong pipeline of new licensees which we expect to more than offset this in 2011 and help maintain our growth trajectory.

Along with the appointment of two experienced non-executives in the first half, our continuing search for a new CFO is now at an advanced stage. We are also doing the work necessary for a move to the Main List."

- Ends -

There will be a meeting and presentation for analysts commencing at 11.00 am today at The Lincoln Centre, 18 Lincolns Inn Fields, London, WC2A 3ED

A copy of the interim results presentation will be published on the Company's website at 9.00 am.  A live video webcast and slide presentation of the analysts' meeting will commence at 11.00 am, which may be accessed through the following web link:

http://www.axisto.com/webcasting/investis/playtech/2010-08-26-playtech/index.htm 

For further information contact:

Mor Weizer, CEO, Playtech Ltd Shuki Barak, CFO, Playtech Ltd Ross Hawley, Investor Relations, Playtech Ltd c/o Pelham Bell Pottinger	[phone]
Piers Coombs / Bruce Garrow Collins Stewart	[phone]
Mumtaz Naseem / Andrew Smith Deutsche Bank	[phone]
David Rydell / Olly Scott Pelham Bell Pottinger	[phone]

Chairman's statement

I am once again pleased to present an excellent set of results to shareholders for the six months to 30 June 2010. Revenues and profits have increased strongly on the previous year and demonstrate the strength of the Group's enhanced product offering and diversified business model.

During the first half of 2010 there have been a number of exciting developments for the Group. In January Playtech unveiled its strategic partnership with New York-based lottery gaming systems provider Scientific Games Corporation to jointly develop and market next-generation internet and land-based gaming products and services for regulated gaming operators in the US and other countries. The Company also announced that it has established a relationship with Sportech PLC, owner of major pool betting brands including the New Football Pools and Vernons, which will include the provision of e-gaming solutions.

In February, Playtech acquired Virtue Fusion, the leading developer and licensor of online bingo products. The deal placed Playtech into a market-leading position in this rapidly growing market segment. Alongside the acquisition of games platform developer GTS in December 2009, Playtech has significantly enhanced its overall product offering.

In the gaming industry as a whole there has been significant change.  Europe's online gaming industry has continued its evolution towards regulation, a trend that is likely to continue as more countries introduce legislation to regulate and tax online gaming. I am also confident that this trend will be reflected in the US in due course, as leading opinion formers make more positive moves towards permitting some form of regulated activity.

Playtech is particularly well positioned to benefit from these changing industry dynamics and the opportunities presented in both existing and newly regulating markets.  We are able to be highly flexible and efficient in the ways we enter new regulated markets, with limited entry costs and the ability to partner with a wide range of well established local operators. 

We have a substantial list of new revenue streams and have more in the pipeline.  These will do much to offset the impact of revenues lost as France closed its doors to online casinos.  While it will take some time before our French poker business returns to historic levels, our growth trajectory remains very much intact.

In the first half of this year we launched our bingo network in Italy, launched in Estonia with the leading regional operator and won the contract for RAY, the state monopoly provider in Finland.   Since then we have also launched our French poker network, won the contract for providing Ladbrokes with software for its substantial UK FOBT gaming terminal estate, and will add flash casino to the products we provide to Betfair. 

During the first half of the year, I am pleased to say that the Board has been significantly strengthened by the addition of Barry Gibson and David Mathewson, both of whom are experienced non-executive directors with considerable knowledge of the gaming industry. In terms of composition and independence, Playtech's Board now meets the requirements of the UK Corporate Governance Code and I expect additional appointments to enhance its capabilities further in due course.

While the search for a permanent CFO has taken longer than many anticipated, this process is into its later stages.  The Board also remains fully committed to a move to the Main List and has commenced the necessary workstreams. 

In the 2009 interim report to shareholders, I committed to improve shareholder communications. In June, Playtech held its first investor day, with presentations and demonstrations focused on giving greater understanding of the Company's operations and product capabilities. I was pleased to see more than 60 analysts and investors attend and the response from investors has been extremely positive. These presentations are available to view on the Company's web-site.

Playtech is a very profitable and strongly cash generative business with no debt and cash reserves of €60 million as at the end of the period. Notwithstanding our expectations of a more challenging operating environment in the second half, the Board is confident that the Company will continue to perform well.  The Board has accordingly approved the payment of an interim dividend of €9.4c per share, (2009: €8.9c) which is payable on 22nd October 2010 to all shareholders on the register as at 24 September 2010. This payment is line with the Company's stated dividend policy and recognises the Board's continued confidence in the strength of the Company's business model.

Success in such a dynamic and fast-changing environment requires innovation, determination and hard work: these are qualities associated with Playtech's talented and diverse employee base and are an underlying reason for these excellent results. I would like to thank them all for their continued loyalty and dedication.

The Company continues to make good progress on many fronts and there are a great many exciting opportunities ahead which give the Board confidence that Playtech will continue to make solid progress for the remainder of 2010 and beyond.

Roger Withers

Chairman

26 August 2010

Chief Executive Officer's report

Overview

I am pleased to report that the first half of 2010 has seen Playtech continuing the momentum it had at the start of the year, with gross income growing by 31% to €87.9 million, revenues up by 29% to €72.9 million and adjusted EBITDA increasing by 20% to €54.2 million.

The underlying performance of Playtech's business continues to be resilient and recent announcements of the launch of the Italian bingo network, French poker network, casino and poker for RAY (the sole license holder in Finland) and Betfair's casino migration all point to a robust pipeline helping to drive incremental growth. The Group also made a number of acquisitions and strategic alliances in the first half which consolidated its position as the leading independent software provider to the worldwide gaming industry and opening up further opportunities for revenue growth.

Strategy

We remain committed to a strategy of focusing on regulated or soon-to-be-regulated markets as a business to business (B2B) services provider. I believe this approach delivers substantial benefits to licensees and ensures a clear alignment with their business interests which deepens the relationship.  It allows Playtech to focus on the continual development of a broad range of market-leading gaming products and services for a wide range of operators.  We benefit from significant economies of scale in technology innovation and enjoy substantial licensee networks for both poker and bingo.

A major element of industry debate in 2010 has been on the scope for consolidation amongst B2B and B2C operators. Our business model remains robust, given the benefits it brings to new and existing operators in meeting their increasingly important need to compete in terms of player liquidity and scale.  Playtech has been very successful in its M&A actions to date and I therefore see a number of opportunities resulting from such consolidation, and even the largest of operators outsource elements of their software and games development.

Regulatory change is also continuing to drive a period of substantial industry transformation.  Playtech will actively evaluate a broad range of acquisition opportunities that will enable it to enhance its product and service range, maintain a compelling and competitive proposition to existing and prospective licensees, and reinforce our position as the premier B2B provider to the gaming industry. 

Licensees and regulated markets

Playtech's focus on regulated markets has delivered considerable rewards in the first half of 2010. In May the Company was selected to supply online gaming to Finland's Slot Machine Association, Rahaautomaattiyhdistys ('RAY') the exclusive operator of gaming machine and casino games in the country. Playtech is currently implementing its system for RAY, which is anticipated to go live at the start of the fourth quarter. In addition, the Company strengthened its position in the Italian market, launching its bingo network in the country, first with SISAL in March, and subsequently signing SNAI and Eurobet. Other major operators are expected to join in the near future, building on the success of the Italian poker network, which is one of the largest in the country with a 16% market share and is growing faster than the market as a whole.

In France, where new regulations were introduced permitting online poker and sportsbook operations in June, Playtech's poker network was launched with Chillipoker. Three other Playtech customers, JOA, Groupe Tranchant and Casino du Golfe as well as other existing Playtech licensees have applied for a licence. Playtech is focused on attracting a mix of licensees to the network, firstly targeting well established local operators looking to enter the market. A number of our existing international licensees are also actively preparing to apply for licenses and rejoin the regulated network.

While the French poker network will take some months to become established, with the experience of our success in Italy we anticipate growing the network to become one of the largest in France. Given the nature of the regulations Playtech and its licensees have withdrawn their online casino offering from the French market ahead of the regulations and this will have a negative impact on the Group's French revenues for the remainder of the year and into 2011 as the market adapts to the new operating environment.

Elsewhere good progress is being made with existing operations across other regulated markets, such as the UK, and newer markets including Estonia and Serbia.  The Company will soon launch online casino and poker offerings for Casino Grand Madrid, one of the largest and most prestigious land-based casino operators in Spain. Incremental licensee opportunities are expected elsewhere in Europe and further afield across the product range.

Looking to the longer term, we continue to explore opportunities with lottery providers and other government owned operators in markets where regulation is expected or underway. The Sciplay joint venture has generated considerable interest in the US as well as Europe.  These bodies have been keen to engage with Sciplay and understand its product offering, particularly its bespoke lottery product. Whilst regulation remains some way off, the joint venture's profile is increasing and positive relationships are being built. I am confident that Playtech will receive further serious consideration from all operators as and when opportunities arise.

William Hill Online

In the first half of 2010, William Hill Online has continued to strengthen its competitive position, further developing a market-leading Sportsbook and providing a high-quality gaming experience.

Our 29% interest contributed a share of profit of €15.0 million (£12.9m), up 46% in the first half of 2010, compared to the first half of 2009.

The good momentum seen in the first quarter of 2010 continued through the rest of the first half, with new accounts up 38% and unique active players up 20% for the half versus the comparable period.

However, following the Group's decision to withdraw from the French market, it is likely that Casino net revenue in the second half will be below that seen in the prior year, as William Hill announced in May.

Products

Playtech's licensees benefit from a highly flexible open architecture gaming platform and a best-of-breed product range, recently enhanced by the addition of the Virtue Fusion bingo network and GTS's technology platform and large portfolio of games. Well over half of the Company's employees work in research and development roles and Playtech continues to invest in improvements to its product suite and the development of new platforms, such as mobile and TV.

Casino

As Playtech's principal product, casino has continued to perform strongly in the first half of the year, with revenues up 31% on the first half of 2009 to €49.1 million.  With more than 500 fixed odds, virtual sports, slots, and table games, including some leading edge branded content, Playtech has one of the most comprehensive and exciting suites of side-games available in the market.  Recent launches include additions to the branded content such as "Rocky" and "Pink Panther" following other Marvel brands which were introduced in the first half of the year.  In total some 60 new games were launched across flash and download formats.

Today's announcement of the launch of Betfair's web-based casino with Playtech at the beginning of September is another very positive step, as this is their principal format.  It reflects a shifting market focus towards one where a complementary web-based offering is becoming equally important to the traditional high definition download product, particularly for attracting new players to try out games for the first time.

This change in focus was one which Playtech's acquisition of GTS at the end of 2009 has helped in strategic positioning, as GTS has given the Company substantial browser-based technology expertise and an open architecture platform with access to over 25 third party game developers.  Over the past six months the GTS platform was integrated with Playtech's IMS management platform to deliver substantial functionality to licensees.  GTS's strong positioning with European sportsbooks also helped to mitigate the slowdown in player activity as the World Cup dominated players' attention in June and early July.

Poker

While poker enjoyed a strong first quarter to the year, recent activity has fallen back in line with the rest of the market in the second quarter. During the period poker revenues were €15.8 million, a decline of 5% when compared with the first half of 2009. Poker has been impacted in the period by the football World Cup, with players less willing to participate in lengthy tournaments and sportsbook operators focusing their marketing spend on sports betting. I believe that Playtech's poker network strategy has helped to mitigate the impact of the decline in the poker market, where the unlevel playing field remains keenly felt.

The iPoker network is focusing on attracting and nurturing new recreational players who are the lifeblood of a healthy network. The diverse nature of Playtech's licensees also means that it has no significant exposure risks by way of geography, licensee or player type. It is increasingly clear that the best opportunities for growth in poker will be in the newly regulated markets, where a broader range of advertising is permitted which will encourage a wider range of players, as the success of the Italian poker network demonstrates. I believe it was this approach that underpinned Playtech's winning both Poker Network of the Year and Poker Software Supplier of the Year at the EGR B2B awards in June.

Bingo

Since Virtue Fusion was acquired in February its performance has exceeded our expectations. Bingo revenues in the period, which did not show a full six months contribution from Virtue Fusion, were €4.5 million, compared with €0.1 million in the same period last year. Virtue Fusion has delivered strongly on the objectives set at the time of the acquisition helped by a programme of highly successful product launches such as "Britain's Got Talent" and "Deal or No Deal," for which it won one of its three awards in June for best bingo software and innovation. I am confident that Playtech's contribution from bingo will continue to grow strongly, with a pipeline of significant operators in detailed discussions to join the network both in the UK and elsewhere as Playtech brings its international experience to bear.

Other

Videobet, the server-based gaming machine division, has undergone a transformational six months and is starting to show its true potential, providing the link between online gaming technology and the land-based market.  At the start of the year Videobet signed an exclusive agreement with The Global Draw, the UK's leading provider of server based gaming terminals to upgrade its technology platform.  This included upgrading 13,500 Fixed Odds Betting Terminals (FOBT) in the UK to the Videobet platform over the course of the year, which is progressing successfully.

Videobet recently announced an agreement, again through The Global Draw, under which Videobet will provide the technology platform to Ladbrokes for approximately 7,600 of its gaming machines, nearly its entire estate. Once these machines are converted, Videobet software will be a UK market leader.  On the back of this success in the key UK market, Videobet is exploring further opportunities internationally, and already has a growing footprint in Romania, Czech Republic and Italy.

Mor Weizer

Chief Executive Officer

26 August 2010

Financial and Operational Review

I am pleased to present Playtech's financial results for the six months ended 30 June 2010.  Playtech has again delivered a robust financial performance and achieved strong growth in both income and profit over the same period in 2009.

Gross income for the period increased by 31% to €87.9 million (2009: €66.9 million), of which €15.0 million (2009; €10.3 million) related to Playtech's income from its associate, William Hill Online ("WHO"). Total revenues for the six months were €72.9 million, representing an increase of 29% over the €56.7 million achieved in the first half of 2009.

Of this, Casino revenues totalled €49.1 million (2009: €37.6 million), an increase of 31% and Poker revenues totalled €15.8 million, (2009: €17.3 million), a decrease of 8%.  Revenues from Bingo are identified separately for the first time and totalled €4.5 million (2009: €0.1 million).

Net profit for the six months ended 30 June 2010 amounted to €37.0 million (2009: €32.5 million), an increase of 14%. Earnings per share ('EPS') were 15.3 € cents based on the weighted average number of shares over the period (2009: 13.6 € cents) and 14.7 € cents (2009: 13.1 € cents) on a fully diluted basis.

Net profit is calculated after charging professional costs on acquisitions and after various non-cash charges relating to historic acquisitions and investments together with the employee stock option plan.

Adjusted EBITDA, adjusted Net Profit and adjusted EPS

Management believes that the results, excluding certain one-off items and non-cash items, better presents the underlying trading performance of the Group for the period and sets out below the basis on which these are calculated and reconciled to the Group's accounts for adjusted EBITDA, adjusted net profit and adjusted EPS.

The principal adjustments relate to the amortization of intangibles relating to acquisitions and investments comprising: WHO (2008), Tribeca (2007), Gaming Technology Solutions Limited (GTS) (2009), Virtue Fusion Limited (2010), CY Foundation Group Limited (2007) and AsianLogic Limited (2007). In the first half of 2010 these totalled €6.3 million (2009: €2.8 million). The increase over the same period in 2009 is due to the recent acquisitions of GTS and Virtue Fusion.

In addition, charges relating to the employee share option scheme of €1.8 million (2009: €3.5 million) are excluded.  The decline in this charge mainly relates to the option repricing plan approved by the board in 2009.

Adjusted EBITDA

Adjusted EBITDA is calculated after adding the income from Playtech's associate, WHO, together with adding back expenses related to professional costs on acquisitions and after charging various non-cash charges as detailed above. 

Adjusted EBITDA for the period ended 30 June 2010 totalled €54.2 million (2009: €45.3 million), an increase of 20% over the same period in 2009. Adjusted EBITDA margin from gross income in the six months period was 62% compared to 69% in the first half of 2009. The decrease is due to the VF and GTS acquisitions in addition to further cost expansion.

	H1/10	H1/09
	€000	€000
Operating profit	28,989	27,561
Amortization	6,382	2,754
Depreciation	1,423	1,092
EBITDA	36,794	31,407
Share of profit  in WHO	15,013	10,286
Change in fair value of available for sale investment in CY Foundation and AsianLogic	(231)	72
Professional expenses on acquisitions	765	-
Employee stock option expenses	1,825	3,525
Adjusted EBITDA	54,166	45,290
Adjusted EBITDA margin (out of gross income)	62%	68%

Adjusted Net Profit and EPS

Adjusted net profit for the six months ended 30 June 2010 totalled €48.2 million (2009: €43.0 million), an increase of 12%. The adjusted EPS for the six months period, based on the weighted average number of shares in the period was 19.9 € cents (2009: 18.0 € cents).

	H1/10	H1/09
	€000	€000
Net profit	36,958	32,387
Amortization of intangibles on acquisition of WH Online	4,922	5,257
Change in fair value of available for sale investment	(231)	72
Discounting of deferred and contingent consideration	358	202
Amortization on acquisitions	3,564	1,597
Employee stock option expenses	1,825	3,525
Professional expenses on acquisition	765	-
Adjusted net profit	48,161	43,040
Adjusted net profit margin (out of gross income)	55%	64%
Adjusted basic EPS (in Euro cents)	19.9	18.0
Adjusted diluted EPS (in Euro cents)	19.2	17.4

Cost of Operations

Playtech's business model is centred around the ongoing development of its technology platform and of new games and products in response to demand from its licensees and new opportunities particularly in regulated markets. This continual development process supports revenue growth both organically from its existing licensees and through the winning of additional licensees across a wide range of products and geographic markets.   

While there is a very diverse licensee base, Playtech benefits from substantial economies of scale which supports a very substantial software development capability.  With a high proportion of fixed costs being principally employee costs, the revenue share model delivers substantial operational gearing.

The Group also makes strategic acquisitions, investments and joint ventures in order to further strengthen its market position and competitiveness. This results in increased administrative expenses as well as increasing the overall scale of the operations.

Adjusted Operating Expenses for the period ended 30 June 2010, were €33.7 million (2009: €21.6 million), representing an increase of 56% over the first half of 2009. This excludes the non-cash charges and professional costs on acquisitions totalling €10.2 million (2009: €7.4 million) mentioned earlier.

The main increases in such operating expenses in the period relates to both employee-related costs, which represents 56% of the Adjusted Operating Expenses (2009: 58%), and revenue driven costs which both reflect the growth in the number of employees in the period following the VF and GTS acquisitions, together with the related costs of those transactions. 

Adjusted Operating Expenses
	H1/10	H1/09
	€000	€000
Operating expenses	43,903	29,093
Amortization and depreciation	(7,804)	(3,847)
Change in fair value of available for sale investment in CY Foundation and AsianLogic	231	(72)
Professional costs on acquisitions	(765)	-
Employee stock option expenses	(1,825)	(3,525)
Adjusted Operating Expenses	33,740	21,649

Financial Income and Tax

Cash is generally held in short-term deposits, which generated a financial income of €0.4 million in the period (2009: €0.5 million). Financial income also includes €0.2 million received as a  dividend from the investment in AsianLogic Limited (2009: €nil).

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 different jurisdictions and are operating on a cost plus basis. The subsidiaries are taxed on their residual profit. Tax charges in 2010 totalled €0.8 million (2009: €0.4 million), resulting in a 2.0% effective tax rate (2009: 1.3%). The increase in the effective tax rate is mainly due to the GTS and VF acquisitions.

Cash Flow

Playtech continues to be a highly cash generative business, and the dividend received from WHO has further increased the cash flow of the company. The main uses for funds were dividend payments and funding of the consideration payable for the acquisition and investments undertaken in the period.

Cash and cash equivalents as at 30 June 2010 amounted to €60 million (2009: €48.7 million), representing 16.1% (2009: 16.5%) of the Group's total assets.

In the period ended 30 June 2010, the Group generated €44.8 million from its operating activities (2009: €27.1 million). Dividend payments made on behalf of William Hill Online are presented in cash generated from investing activities.

The Group's cash usage in investing activities was €25.6 million. This is comprised of the acquisition of Virtue Fusion Limited assets and the investment in Sportech, netted-off by the dividend received from the investment in WH Online (2009: cash generated of €6.0 million, the majority of which was derived from the dividend received from the investment in WH Online).

The Group's cash usage in financing activities was €18.0 million, the majority of which represented payment of the final dividend of 2009 (2009: €15.9 million).

Partnerships with Scientific Games

On 21 January 2010, Playtech formed two strategic partnerships 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.

§ An exclusive Joint Venture focused on the B2G online gaming market, called 'Sciplay' that will utilise Playtech's technology capabilities together with Scientific Games' global infrastructure and relationship. On 30 April 2010 the Group purchased 50% of the share capital of Sciplay for a consideration of €12,500; and

§ Exclusive agreements for Playtech's Videobet subsidiary to develop gaming terminal software for Scientific Games and its subsidiary, The Global Draw.

Investment in Sportech PLC

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.

Acquisition of Virtue Fusion Limited

On 12 February 2010 the Group entered into an assets purchase agreement with Virtue Fusion Limited, the leading developer and licensor of online bingo products. The Group purchased the IP Technology, customers list, brand, plant and equipment, other assets and 100% of the shares of Virtue Fusion Limited subsidiaries: Virtue Fusion CM Limited, and Virtue Fusion (Alderney) Limited ("VF business").

The group paid an initial consideration, including working capital adjustments, of €37.7 million (£33.2 million) in cash.  Additional contingent consideration of up to €8.6 million (£7.0 million)  is payable in the first quarter of 2011 based on the adjusted EBIT performance of the VF business in 2010.

Balance Sheet

Cash and cash equivalents as at 30 June 2010 were €60.0 million (2009: €48.7 million).

The majority of the trade receivables balance as at 30 June 2010 were due to amounts payable by licensees for the month of June 2010 as these are principally paid one month in arrears.

Intangible assets as at 30 June 2010 totalled €99.0 million (2009: €44.7 million), the majority of which comprised the customer list purchased from Tribeca, and in connection with GTS, and the VF business, goodwill arising from the acquisitions of Tribeca, GTS and the VF business, brands purchased from Virtue Fusion Limited, patent and intellectual property rights and the development costs of products such as new slot games, Mahjong, the mobile platform, etc. The increase in the intangible assets is mainly due to the VF business acquisition.

Available for sale investments totalling €12.0 million (2009: €4.8 million) comprise the investments in Sportech and AsianLogic in 2010 and investments in Foundation and AsianLogic in 2009.The investment in Foundation was sold during the first half of 2010.

Deferred consideration of €16.2 million (net of discount of €0.2 million) as at 30 June 2010 (2009: €13.6 million, net of discount of €0.8 million represents the present value of the remaining consideration to be paid for the investment in WHO.

Contingent consideration of €12.2 million (net of discount of €0.4 million) as at 30 June 2010 represents the present value of the contingent considerations to be paid for the investment in GTS and the acquisition of the VF business.

Investments in equity accounted associates relate to the investment in WH Online and totalled €165.6 million (2009: €175.6 million).

Dividend

In June 2010, the Group distributed a final dividend of 9.4 € cents per share, totalling approximately €22.9 million.  The Board has declared the payment of an interim dividend of 9.4 € cents per ordinary share (2009: 8.9 € cents) which is payable on 22nd October, 2010 to all shareholders and depositary interest holders on the register as at 24th September, 2010. 

Shuki (Moshe) Barak

Chief Financial Officer

26 August 2010

Consolidated Income statement

		For the six months ended 30 June 2010		For the six months ended 30 June 2009		For the year ended 31 December 2009
	Note	€000		€000		€000
Revenues		72,892		56,654		114,775
Distribution costs		(33,810)		(22,032)		(45,453)
Administrative Expenses		(10,093)		(7,061)		(12,873)
Operating profit before the following items:		37,730		33,912		68,764
Employee stock option expenses		(1,825)		(3,525)		(5,150)
Professional expenses on acquisitions		(765)		-		(360)
Amortization of intangible assets	3	(6,382)		(2,754)		(6,406)
Change in fair value of available for sale investments	7	231		(72)		(399)
Operating profit		28,989		27,561		56,449
Financing cost - discounting consideration		(358)		(202)		(418)
Financing cost - other		(1,442)		(38)		(93)
Income from associate		15,013		10,286		22,534
Amortization of intangibles in  associate		(4,922)		(5,257)		(10,513)
Profit before taxation		37,720		32,816		70,339
Tax expense		(762)		(429)		(828)
Other comprehensive income (loss) for the period:
Adjustments for change in fair value of available for sale equity instrument	7	(2,414)		-		1,025
Earnings per share (in cents)	8
Basic		15.3		13.6		29.0
Diluted		14.7		13.1		28.0

Consolidated Income statement

		For the six months ended 30 June 2010		For the six months ended 30 June 2009		For the year ended  31 December 2009
	Note	€000		€000		€000
Revenues		72,892		56,654		114,775
Distribution costs		(33,810)		(22,032)		(45,453)
Administrative Expenses		(10,093)		(7,061)		(12,873)
Operating profit before the following items:		37,730		33,912		68,764
Employee stock option expenses		(1,825)		(3,525)		(5,150)
Professional expenses on acquisitions		(765)		-		(360)
Amortization of intangible assets	3	(6,382)		(2,754)		(6,406)
Change in fair value of available for sale investments	7	231		(72)		(399)
Operating profit		28,989		27,561		56,449
Financing cost - discounting consideration		(358)		(202)		(418)
Financing cost - other		(1,442)		(38)		(93)
Income from associate		15,013		10,286		22,534
Amortization of intangibles in  associate		(4,922)		(5,257)		(10,513)
Profit before taxation		37,720		32,816		70,339
Tax expense		(762)		(429)		(828)
Other comprehensive income (loss) for the period:
Adjustments for change in fair value of available for sale equity instrument	7	(2,414)		-		1,025
Earnings per share (in cents)	8
Basic		15.3		13.6		29.0
Diluted		14.7		13.1		28.0

Consolidated Statement of changes in Equity

	Additional Paid in Capital	Available for sale reserve	Retained earnings	Total
	€000	€000	€000	€000
For the six months ended June 30, 2010
Balance at 1 January 2010	183,563	1,025	85,328	269,916
Changes in equity for the period
Total comprehensive income (loss) for the period	-	(2,414)	36,958	34,544
Dividend paid			(22,914)	(22,914)
Exercise of options	4,923	-	-	4,923
Employee stock option scheme	-	-	1,825	1,825
	Additional Paid in Capital	Available for sale reserve	Retained earnings	Total
	€000	€000	€000	€000
For the year ended 31 December, 2009
Balance at 1 January 2009	180,097	-	50,109	230,206
Changes in equity for the year
Total comprehensive income for the year	-	1,025	69,511	70,536
Dividend paid			(39,562)	(39,562)
Exercise of options	3,466	-	-	3,466
Employee stock option scheme	-	-	5,270	5,270
	Additional Paid in Capital	Available for sale reserve	Retained earnings	Total
	€000	€000	€000	€000
For the six months ended June 30, 2009
Balance at 1 January 2009	180,097	-	50,109	230,206
Changes in equity for the period
Total comprehensive income (loss) for the period	-	-	32,387	32,387
Dividend paid			(18,194)	(18,194)
Exercise of options	2,341	-	-	2,341
Employee stock option scheme	-	-	3,603	3,603

Consolidated Balance Sheet

		As of 30 June 2010	As of 30 June 2009	As of 31 December 2009		Movement
	Note	€000	€000	€000		€000
NON-CURRENT ASSETS
Property, plant and equipment		9,970	4,621	8,395		1,575
Intangible Assets	3	98,955	44,718	65,459		33,496
Investments in Equity accounted associates	4	165,606	175,643	170,366		-4,760
Available for sale investments	7	11,997	4,815	5,513		6,484
Other non-current assets		3,178	1,546	2,309		869
		289,706	231,343	252,042		37,664
CURRENT ASSETS
Trade Receivables		12,614	9,125	6,994		5,620
Other Receivables		8,985	5,437	10,119		-1,134
cash equivalents Cash and		59,958	48,725	58,700		1,258
		81,557	63,287	75,813		5,744
EQUITY
Additional paid in Capital		188,486	182,438	183,563		4,923
Available for sale reserve		(1,389)	-	1,025		-2,414
Retained earnings		101,197	67,905	85,328		15,869
Equity attributable to equity holders of the parent	9	288,294	250,343	269,916		18,378
NON CURRENT LIABILITIES
Other Non Current Liabilities		973	1,220	1,168		-195
Deferred revenues		13,111	16,438	14,745		-1,634
Deferred tax liability		2,090	-	2,231		-141
Deferred consideration	4	-	13,580	-
Contingent consideration	5	3,920	-	6,983		-3,063
		20,094	31,238	25,127		-5,033
CURRENT LIABILITIES
Trade Payables		12,144	2,776	9,493		2,651
Progressive and other operators' jackpot		15,295	2,325	1,068		14,227
Tax liabilities		1,818	18	1,087		731
Deferred revenues		3,421	3,473	3,441		-20
Deferred consideration		16,151	-	13,554		2,597
Contingent consideration	5,6	8,261	-	-		8,261
Other  Payables		5,785	4,457	4,169		1,616
		62,875	13,049	32,812		30,063

Consolidated Statement of Cash flows

	For the six months ended 30 June 2010		For the six months ended 30 June 2009		For the year ended 31 December 2009
	€000		€000		€000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax	37,720		32,816		70,339
Tax	(762)		(429)		(828)
Adjustments to reconcile net income to net cash provided by (used in) operating activities (see below)	7,874		(5,283)		1,176
Net cash provided by operating activities	44,832		27,104		70,687
CASH FLOWS FROM INVESTING ACTIVITIES
Long term deposits	(101)		191		172
Long term loan	(757)		(397)		(1,141)
Dividend received from equity-accounted associates	15,996		10,286		18,528
Acquisition of property, plant and equipment	(2,118)		(890)		(5,886)
Investment in available for sale investments (note 7)	(11,332)		-		-
Proceeds from sale of available for sale investments	2,665		-		-
Acquisition of intangible assets	(34)		(310)		(2,309)
Acquisition of subsidiary, net of cash acquired (note 5)	(26,136)		-		(11,310)
Capitalized development costs	(3,772)		(2,964)		(5,503)
Others	6		-		-
Net cash provided by (used in) investing activities	(25,583)		5,916		(7,449)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid	(22,914)		(18,194)		(39,562)
Exercise of options	4,923		2,341		3,466
Net cash used in financing activities	(17,991)		(15,853)		(36,096)
INCREASE IN CASH AND CASH EQUIVALENTS	1,258		17,167		27,142
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	58,700		31,558		31,558

Consolidated Statement of Cash flows

	For the six months ended 30 June 2010		For the six months ended 30 June 2009		For the year ended 31 December 2009
	€000		€000		€000
ADJUSTMENT TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Income and expenses not affecting operating cash flows:
Depreciation	1,423		1,092		2,372
Amortization	6,383		2,754		6,406
Income from associate	(15,013)		(10,286)		(22,534)
Amortization of intangibles in associate	4,922		5,257		10,513
Change in fair value of available for sale investment	(231)		72		399
Employee stock option plan expenses	1,825		3,525		5,150
Others	(13)		-		122
Changes in operating assets and liabilities:
Decrease in trade receivables	(2,020)		957		3,486
Decrease (Increase) in other receivables	693		(2,635)		(3,076)
Increase (decrease) in trade payables	1,064		(2,833)		3,458
Increase (decrease) in progressive and other operators' jackpot	5,931		896		(361)
Decrease in other payables	4,564		(2,505)		(1,457)
Decrease in deferred revenues	(1,654)		(1,577)		(3,302)
	7,874

Consolidated Statement of Cash flows

Acquisition of subsidiary net of cash acquired (Note A)
	For the six months ended		For the six months ended		For the year ended
	30 June 2010		30 June 2009		31 December 2009
	€000		€000		€000
Property, plant and equipment	(886)		-		(166)
Intangible assets	(36,073)		-		(20,851)
Trade receivables	(3,600)		-		(398)
Other receivables	(691)		-		(214)
Other non-current assets	(11)		-		-
Cash and cash equivalents	11,610		-		(169)
Trade payables	1,587		-		426
Tax liabilities	-		-		2,851
Other accounts payable	702		-		73
Total purchase price	(27,362)		-		(18,448)
Less: Cash of subsidiary acquired	(11,610)		-		169
Less: Deferred consideration	4,540		-		6,969
	(34,432)
Non-cash transactions (Note B)
	For the six months ended		For the six months ended		For the year ended
	30 June 2010		30 June 2009		31 December 2009
	€000		€000		€000
Intangible assets	-		(77)		(120)
Other payables			-		(172)
Other Non Current Liabilities	-				-
Investments	(1,133)		-		172
Retained earnings	-		77		120
Other receivables	1,133		-		-
Investment in available for sale (note 5)	2,414		-		(1,025)
Capital Reserve	(2,414)		-		1,025

Note 1- General

A. Playtech Limited (the "Company") was incorporated in the British Virgin Islands 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.

B. The interim financial statements as at 30 June 2010, and 2009 and the six months then ended, respectively, have been reviewed by the Group's external auditors.

The financial statements for the year ended 31 December 2009, which were prepared under IFRS received an unqualified audit report.

The financial information for the periods ended 30 June 2010 and 30 June 2009 contained in this interim announcement is unaudited.

 

Note 2- Significant accounting Policies

A.   Accounting principles

The consolidated interim financial information has been prepared in accordance with the accounting policies that are expected to be adopted in the Group's full financial statements for the year ended 31 December 2010 which are not expected to be significantly different to those set out in Note 2 of the Group's audited financial statements for the year ended 31 December 2009, except for IFRS 3 (revised) Business Combinations.  These are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and are effective at 31 December 2010 or are expected to be adopted and effective at 31 December 2010. 

The financial information has not been prepared (and is not required to be prepared) in accordance with IAS 34. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this financial information

In the current year, the Group will adopt the following standards and interpretations, issued by the International Accounting Standards Board or the IFRIC, for the first time.

IFRS 2 (Amended) Group Cash-settled Share-based Payment Transactions (effective for annual periods beginning on or after 1 January 2010).  This is not expected to have a material impact on the Group's consolidated results or financial position.

IFRS 3 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009).  IFRS 3 (revised) includes certain very significant changes to the requirements of IFRS, and options available, in accounting for business combinations, in particular all legal and professional fees have been expensed immediately, and contingent consideration is assessed at fair value on the date of acquisition, with subsequent changes being recognised in the income statement and not goodwill.

Amendment to IAS 27 Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2009).  IAS 27 was adopted at the same time as IFRS 3 (revised), will impact on acquisitions of subsidiaries achieved in stages and disposals of interests, with significant differences in the accounting depending on whether or not control is obtained as a result of the transaction, or where a transaction results only in a change in the percentage of a controlling interest.

The following relevant standards and interpretations were issued by the IASB or the IFRIC before the period end but are as yet not effective for the 2010 year end:

IAS 24 (Revised) Related Party Disclosures (effective for annual periods beginning on or after 1 January 2011).

IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2013).

IFRS 19 Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods beginning on or after 1 April 2010).

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

There has been no change in the nature of the critical accounting estimates and judgments as set out in Note 3 to the Group's audited financial statements for the year ended 31 December 2009.

B.   Foreign currency

The financial statements of the Company and its subsidiaries are prepared in Euro (the functional currency), which best reflects the economic substance of the underlying events and circumstances relevant to the Group's transactions and balance in foreign currencies are converted into Euro in accordance with the principles set forth by International Accounting Standard (IAS) 21 ("The Effects of Changes in Foreign Exchange Rates"). Accordingly, transactions and balances have been converted as follows:

Monetary assets and liabilities- at the rate of exchange applicable at the balance sheet date; Income and expenses 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 recognized in the income statement. 

Note 3 - Intangible assets

	€000
Net book value - as of 31 December, 2009	65,459
Additions due to business combinations (note 5)	36,073
Acquisition of intangible assets	3,806
Amortization	(6,383)
Net book value - as of 30 June, 2010	98,955

Note 4 - Investment in equity accounted associates

	30 June,		31 December,
	2010	2009	2009
	€000	€000	€000
Investment in equity accounted associates comprise:
A.  Investment in William Hill Online	165,593	175,643	170,366
B.  Investment in Sciplay	13	-	-
	165,606	175,643	170,366

A.   Investment in William Hill Online

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

	€000
Investment in equity accounted associates at 1 January 2009	181,072
Adjustment to expenses	(172)
	180,900
Income from associate	10,286
Amortization of intangibles in associate	(5,257)
Dividend	(10,286)
Investment in equity accounted associates at 30 June 2009	175,643
Income from associate	12,248
Amortization of intangibles in associate	(5,256)
Dividend	(12,269)
Investment in equity accounted associates at 31 December 2009	170,366
Income from associate	15,013
Amortization of intangibles in associate	(4,922)
Dividend	(14,864)
Investment in equity accounted associates at 30 June 2010	165,593

The deferred consideration as of 30 June 2010 is €16.2 million (net of discount of €0.2 million) which is due for payment on 30 December 2010.

B.   Investment in Sciplay

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

An exclusive Joint Venture focused on the B2G online gaming market on a global basis, called 'Sciplay' that will utilise Playtech's technology capabilities together with Scientific Games' global infrastructure and experience. On 30 April 2010 the Group purchased 50% of the share capital issued for a consideration of €12,500.

Note 5 - Acquisition during the period

On 12 February 2010 the Group entered into an assets purchase agreement with Virtue Fusion Limited, the leading developer and licensor of online bingo products. The Group purchased the IP Technology, customers list, brand, plant and equipment, other assets and 100% of the shares of Virtue Fusion Limited subsidiaries: Virtue Fusion CM Limited, Virtue Fusion (Alderney) Limited and Virtue Fusion NV (hereinafter VF business).

The group paid an initial consideration, including working capital adjustments, of €37.7m (£33.2m) in cash and additional contingent consideration of up to €8.6m (£7.0m) is payable in the first quarter of 2011 based on adjusted EBIT performance in 2010.

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

	Book value prior to acquisition	Adjustments	Fair value on acquisition
	€000	€000	€000
Property, plant and equipment	886	-	886
Intangible assets	-	25,763	25,763
Trade receivables	3,600	-	3,600
Other receivables	702	-	702
Cash and cash equivalents	11,610	-	11,610
Trade payables	(1,587)	-	(1,587)
Progressive and other operators' jackpot	(8,296)	-	(8,296)
Other payable	(702)	-	(702)
Net identified assets	6,213	25,763	31,976
Goodwill			10,310
Present value of consideration			42,286

		€000
Cash consideration		37,746
Contingent consideration		4,682
Total cash consideration		42,428
Finance cost arising on discounting of contingent consideration		(142)
Present value of consideration		42,286
Cash purchased		(11,610)
Net cash paid		30,676

The contingent consideration of €4.5 million (net of discount of €0.1 million) is dependent on profits generated by the VF business in 2010. The amount included above represents the directors' current best estimate of the amount payable.

Adjustments to fair value include the following:

	Amount	Amortization
	€000	%
Customer list	18,828	12.5
IP Technology	3,035	10
Brand	3,900	10
Total intangible assets	25,763

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 VF business.

The key assumptions used by management to determine the value in use of the IP Technology, customer relationships and Brands within VF 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 and brand, considering market competition, quality, absolute and relative profitability.

·      The discount rate assumed is equivalent to the WACC for the brand, WACC plus 1% for the IP Technology and WACC plus 2% for the customer relationships.

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

Note 6 - Acquisition in prior period

On 8 December 2009 the Group acquired 100% of the shares of Gaming Technology Solutions Limited, which owns 100% of the shares of VS Technology Limited and VS Gaming Limited (hereinafter "GTS Group"). The GTS Group principal activity is to provide cutting-edge software to the operators in the gaming industry, and through the GTS Enhanced Gaming Engine (EdGE) platform, provide clients with access to soft and casino games (hereinafter "GTS business").

An initial consideration of €10.85 million was paid in cash and additional contingent consideration of up to €10.8 million is payable in respect of the adjusted EBIT performance in 2010 and 2011 in the first quarters of 2011 and 2012 respectively.     

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

	Book value prior to acquisition	Adjustments	Fair value on acquisition
	€000	€000	€000
Property, plant and equipment	166	-	166
Intangible assets	134	9,815	9,949
Trade receivables	398	-	398
Other receivables	214	-	214
Cash and cash equivalents	169	-	169
Trade payables	(426)	-	(426)
Tax liabilities	(103)	-	(103)
Other payable	(73)	-	(73)
Deferred tax liability	-	(2,748)	(2,748)
Net identified assets	479	7,067	7,546
Goodwill			10,883
Present value of consideration			18,429

		€000
Cash consideration		10,851
Contingent consideration		7,327
Expenses paid in cash		628
Total cash consideration		18,806
Finance cost arising on discounting of contingent consideration		(377)
Present value of consideration		18,429
Cash purchased		(169)
Net cash paid		18,260

The contingent consideration of €7.0 million (net of discount of €0.4 million) is dependent on profits generated by the GTS business over a period of 2 years following the date of acquisition. The amount included above represents the directors' current best estimate of the amount payable.

Note 7 - Available for sale investments

		30 June,				31 December,
		2010	2009			2009
		€000	€000			€000
Available for sale investments comprise:
A.   Investment in Foundation Group Limited		-	2,761			3,459
B.   Investment in AsianLogic		2,054	2,054			2,054
C.   Investment in Sportech PLC		9,943	-			-
		11,997	4,815			5,513
	30 June,				31 December,
	2010			2009	2009
	€000			€000	€000
Change in fair value of available for sale investments during the year
A.   Foundation Group Limited	(794)			(327)	(1,025)
B.   AsianLogic	-			399	399
C.   Sportech PLC	(1,389)			-	-

The fair value of quoted investments is based on published market prices.  The fair value of unquoted investments is based on the most recently available market price, less any provision for impairment.

A.    During the period, the Group sold all of its shares in Foundation Group Limited.  Prior to the sale of shares, the carrying value declined by €794k which has been recognised in the consolidated statement of comprehensive income as an impairment. On disposal of the shares, the available for sale reserve at 31 December 2009 of €1,025k has been reclassified to profit and loss, resulting in a net credit of €231k in the consolidated statement of comprehensive income.

B.  As at 3 July 2009, ALL 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.

During 2010 the Group received a dividend of €216,000 that has been reflected in the income statement as finance income.

C.    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 30 June 2010 the market value of this investment was €9,943k.  The decline in market value of €1,389k has been recognized in other comprehensive income in the available for sale reserve in equity.

Note 8 - Earnings Per Share

A. Earnings per share have been calculated using the weighted average number of shares in issue during the relevant financial periods.  The weighted average number of equity shares in issue and the earnings, being profit after tax are as follows:

	For the six months ended 30 June,				For the year ended 31 December,
	2010		2009		2009
	In euro cents		In euro cents		In euro cents
Basic	15.3		13.6		29.0
Diluted	14.7		13.1		28.0
	€000		€000		€000
Profit for the period	36,959		32,387		69,511
	Number		Number		Number
Denominator - basic
Weighted average number of equity shares	241,565,633		238,752,966		239,476,501
Denominator - diluted
Weighted average number of equity shares	241,565,633		238,752,966		239,476,501
Weighted average number of option shares	9,277,895		9,221,383		8,562,031
Weighted average number of shares	250,843,528		247,974,349		248,038,532

B. Adjusted earnings per share

The adjusted earnings per share present the profit for the period before certain significant non cash expenses included in the consolidated statement of comprehensive income as the Directors believe that the adjusted profit represents more closely the underlying trading performance of the business.

	For the six months ended 30 June,				For the year ended 31 December,
	2010		2009		2009
	In euro cents		In euro cents		In euro cents
Basic- Adjusted EPS	19.9		18.0		37.4
Diluted- Adjusted EPS	19.2		17.4		36.1
	€000		€000		€000
Profit for the period	36,958		32,387		69,511
Gains and losses on available for sale investments	(231)		72		399
Amortization on acquisitions	3,564		1,597		3,282
Amortization of intangibles in associate	4,922		5,257		10,513
Finance cost on discounting of deferred and contingent consideration	358		202		418
Employee stock option expense	1,825		3,525		5,150
Professional expenses on acquisitions	765		-		360
Adjusted  profit	48,161		43,040		89,633

As at 30 June 2010, out of the entire share options outstanding, 1,966,000 (2009 - 3,205,106) are antidilutive and therefore not included in the above calculation.

Note 9- Shareholders Equity

A.  Share capital

		Number of shares
		30 June,		30 June,		31 December,
		2010		2009		2009
Authorized		N/A(*)		N/A(*)		N/A(*)
Issued and fully paid		242,317,076		239,869,226		240,204,579

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

B.  Share options exercised

During the period 2,112,497share options were exercised.

C.  Distribution of Dividend

In May 2010, the Company distributed €22,913,530 as final dividend to its existing shareholders for the year ended 31 December 2009.

Note 10 - Contingent Liabilities

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

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.

Independent Review Report to Playtech Limited

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Statement of Cashflow, and the related explanatory notes 1 to 6.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

BDO LLP

Chartered Accountants and Registered Auditors

London

United Kingdom

26 August 2010

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

 

END

 

 

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