Technology driven... Diversified... Playtech plc Growing... Annual Report and Accounts 2014 Playtech plc Annual Report and Accounts For the year ended 31st December 2014 Playtech is the world’s largest online gambling software and services supplier. Traded on the London Stock Exchange, offering cutting-edge, value-added solutions to the industry’s leading operators. Playtech’s approach has been centred on the continual development of best-of-breed gambling products, content and services, built upon strong partnerships with our licensees. Playtech has the most comprehensive product suite in the market, fully integrated into a broad cross-platform offering; our state-of-the-art information management solution (IMS) enables players to gamble online, on mobile and on retail server-based gambling terminals through a single account and wallet. The products, services and distribution channels offered establish Playtech as the ultimate one-stop shop for operators in regulated markets and its pioneering attitude toward regulating markets plays a key role in its continued success. Playtech’s licensees include established online operators, sportsbooks and entertainment brands looking to upgrade or diversify their offering, including bet365, Betfair, Caliente, Gala Coral, Ladbrokes, Paddy Power, Sisal, Sky, SNAI, Titan, William Hill and Winner. Playtech plc Annual Report and Accounts 2014 Highlights of the year Financial highlights Contents Revenue Strategic report 01 Highlights of the year 2013: € 3 67. 2m +24% 02 About us €457.0m 08 Competitive landscape Adjusted EBITDA* 09 Trends 10 Chairman’s Statement 2013: €159.4m +30% 11 Chief Executive’s Review €207.1m 15 Business model Adjusted net profit attributable to owners of parent* 16 Our marketplace 18 Our strategy Financial Review 2013: €148.3m +29% 20 €190.8m 25 Managing risks Adjusted basic EPS* 28 Our sustainability Governance 2013: 50.7 € cents 65.0 € cents +28% 32 Board of Directors Cash balances at year end 34 Chairman’s Introduction to Governance 35 Directors’ Governance Report 43 Audit Committee Report €692.3m 2013: € 527.4m 46 Remuneration Report – Annual Statement 47 Remuneration Policy Report Total ordinary dividend per share** 53 Annual Report on Remuneration 60 Directors’ Report 26.4 € cents 2013: 23.2 € cents Financial statements 67 Independent Auditor’s Report 73 Consolidated statement of comprehensive income Operational highlights 74 Consolidated statement of changes in equity 75 Consolidated balance sheet • Completion of Ladbrokes’ migration to Playtech’s full product 76 Consolidated statement of cash flows suite and IMS infrastructure 78 Notes to the financial statements • Industry-first roll out of a unique, single log-in omni-channel 110 Company balance sheet solution to Coral betting shops 111 Company statement of changes in equity • Signed agreement with Holland Casino for the provision of 112 Company statement of cash flows casino, Live, bingo and poker ahead of forthcoming regulations 113 Notes to the parent company in the Netherlands, following a competitive tender financial statements • Structured agreements signed and launched with Caliente 116 Five-year financial summary in Mexico and RCS Media in Italy, and a turnkey solution for Trinity Mirror in the UK • Acquisition of Aristocrat Lotteries (“Aristocrat”), creating the world’s largest VLT software business • Acquired a 33.3% stake in BGO, gaining access to a game design studio enabling the creation of new content for Playtech’s software platform A number of significant launches including: • Ladbrokes: Live; Spain • Mobile poker in France * Adjusted numbers are calculated after adding back and Belgium including certain non-cash charges, cash expenses related • Innovative Live offerings to professional costs on acquisitions, gains on sale sports; as well as Denmark for Skybet and RAY of investments, share of profit from WHO in 2013, • Gala interactive in Sweden non-cash accrued interest in respect of the convertible • Launch of new BIT solution bond and certain one-off charges (see reconciliation in • Post year end, acquired Yoyo Games Limited in line with the Financial Review starting on page 20). the casual games strategy ** Final dividend of 17.5 € cents is subject to shareholder approval at the forthcoming annual general meeting. Playtech plc Annual Report and Accounts 2014 01 About us Playtech is technology driven... Playtech offers the only true end-to-end, omni-channel gambling software solution whereby players can access all products, in all formats, on all platforms, across all channels, integrating retail, web and mobile channels for the first time in the industry. Such players are proven to spend over two times more than other online players. 02 Playtech plc Annual Report and Accounts 2014 Playtech’s global team of developers are rapidly able to identify and adapt our software and content to any device including new and emerging wearable technology driven... technology such as the new range of smart watches that we have enabled to include our mobile sports betting product. Playtech offers unique, cutting-edge, data- driven technology to take gambling to the next level Playtech is a highly innovative supplier and has developed next generation Business Intelligence Technology (BIT) for its forward-thinking licensees. Harnessing the power of data, Playtech’s highly sophisticated BIT package allows operators to immediately differentiate and optimise their offerings, personalise the user experience and significantly boost their acquisition and retention rates and overall revenues – all via automated processes in real-time. Number of customers signed up to Coral Connect in 2014 160,000 Players are over twice as valuable and cheaper to recruit. Playtech plc Annual Report and Accounts 2014 03 About us continued Playtech is diversified... Playtech has the most comprehensive product suite in the market offered through all distribution channels to its more than 120 licensees, including many of the world’s most successful blue-chip online operators. Expanding our global footprint Playtech supports its licensees and is able to expand as they diversify their businesses geographically, for example supporting Ladbrokes as it moved to Spain, Belgium and Denmark. As markets regulate, there are further opportunities for Playtech to sign up local operators as they seek to move their businesses online, as it did with Holland Casino in 2014. Increasing licensee product penetration Playtech does not supply all of its licensees with every product vertical. There are substantial opportunities therefore to increase the number of products each licensee takes. Progress was made during the year, for example launching Live casino offerings for Skybet and RAY. 04 Playtech plc Annual Report and Accounts 2014 Revenue by geography Europe Asia Rest of World 57% 35% 8% Playtech plc Annual Report and Accounts 2014 05 About us continued Playtech is growing... The global online gambling market is estimated* to have grown at a compound 8.6% per year over the past five years. Over that same timeframe, Playtech’s revenues have increased at a compound annual growth rate of 31.8%. * Source: H2 Gambling Capital. 2009: €20.1 billion; 2014: €30.4 billion. 06 Playtech plc Annual Report and Accounts 2014 Increasing our share of the market During 2014, Playtech achieved organic revenue growth of 20% plus a further 4% derived from acquisitions. Playtech’s growth is achieved through the provision of an expanding portfolio of market- leading software and innovative new technology that continue to drive its licensees’ operations. This is bolstered by the ability to sign up additional new licensees and to cross-sell existing licensees with additional product or to support them in new markets. Uniquely Playtech can offer as a Revenue growth rate between turnkey solution or as part of a 2009–2014 structured agreement or joint venture, value-creating services including affiliate management, media buying, 31.8% five-year CAGR CRM, VIP management and other operational services, all designed to leverage the market-leading tools delivered by Playtech’s IMS platform. Playtech also has an outstanding acquisition track record, investing in new technology, exciting content, and new products. Companies have mostly been acquired on an earn-out basis, enabling Playtech to leverage its existing business and licensee base to create strong synergies. Playtech is focused on making further, similar bolt-on acquisitions. Given the Group’s ability to generate cash and strength of its balance sheet following the sale of its stake in William Hill Online, and convertible bond issue, the Board is seeking strategic M&A opportunities to take the business to the next level. Revenue derived from Playtech’s mobile channel increased 64% in 2014, yet it remains immature with significant opportunity for future growth. Playtech plc Annual Report and Accounts 2014 07 Competitive landscape The single most realistic alternative to outsourcing to Barriers to entry Playtech is for operators to utilise their own proprietary platform together with proprietary and third party software, Scale which while currently accounting for around 30% of the total The faster growth and increased scale of Playtech has online gambling market, Playtech management believe is an enabled the development of a superior platform, more increasingly unsustainable model. relevant software and more products than other suppliers – providing defensive moats around the business. New B2B Playtech enjoys significant