Playtech plc Annual Report and Financial Statements 2020 Playtech is the leading technology company in the gambling industry, with a focus on regulated and regulating markets. Founded in 1999 and premium listed on the Main Market of the London Stock Exchange, Playtech is focused on bringing innovative products and data-driven technology to licensees and end customers. Contents Strategic Report Investment case 2 Financial highlights 3 Operational highlights 4 Company overview 10 6 Chairman’s statement 8 COVID-19 response 10 Our investment case 12 Trends in our markets 14 Strategy 16 Sustainable Success 18 Our business model 20 US market 22 Stakeholder engagement Stakeholder 26 Chief Executive Officer’s review engagement 31 Our awards Technology and innovation 32 Our diversified technology 22 36 The infrastructure of the industry 37 Innovation 39 Our content studios 40 Playtech Academy 41 Our B2C division 44 Regulation 46 Responsible business and sustainability CEO’s review 70 Chief Financial Officer’s review 78 Emerging risks, principal risks 26 and uncertainties Governance 84 Chairman’s introduction to governance 86 Board of Directors 88 Directors’ governance report 96 Audit Committee report Remuneration Report 100 Statement by the Committee Chairman Sustainability 103 Directors’ Remuneration Policy 109 Annual report on remuneration 46 120 Directors’ report Financial Statements 127 Independent auditor’s report 135 Consolidated statement of comprehensive income 136 Consolidated statement of changes in equity 137 Consolidated balance sheet 138 Consolidated statement of cash flows 141 Notes to the financial statements 194 Company statement of changes in equity 195 Company balance sheet 196 Company statement of cash flows 197 Notes to the Company financial statements 207 Five-year summary Company Information 208 Company information You will find the interactive icons below View Digital Summary Report: throughout this report to help aid navigation www.ar20.playtech.com Playtech plc Annual Report and Financial Statements 2020 1 Strategic Report Financial highlights Resilient financial performance Strong operating cash flow and share price performance despite pandemic headwinds. Financial highlights Revenue Adjusted EBITDA (incl. Finalto) €1,079m €310m 2020 1,079 2020 310 2019 1,441 2019 383 2018 1,132 2018 345 Operating cash flow Regulated revenue €367m 84% 2020 367 2020 84 2019 321 2019 87 2018 387 2018 78 Share price chart “ We entered the crisis with a strong balance sheet. Decisive management 500 action at the outset of the pandemic to 400 control costs and preserve cash ensured 300 we remain in a solid financial position.” 200 100 Andrew Smith Chief Financial Officer 0 1 Jan 1 Apr 1 Jul 1 Oct 1 Jan 1 Apr 1 Jul 1 Oct 31 Dec 2019 2019 2019 2019 2020 2020 2020 2020 2020 2 Playtech plc Annual Report and Financial Statements 2020 Operational highlights Strategic Report Strategic Achieving strategic milestones Business expansion Technology leadership Building a better business First steps of US Playtech Live launches Launch of Sustainable expansion strategy immersive gameshow Success strategy Having been granted regulatory approval to Playtech’s Live division launched a ground-breaking, In 2020, Playtech launched its Sustainable operate in New Jersey, a major milestone for immersive concept with Adventures Beyond Success strategy to consolidate its position the Group, in Q3 2020 Playtech launched its Wonderland, a gameshow featuring a revolving as a global leader in safer products, data analytics award-winning casino content in New Jersey with studio and augmented reality, which was and player engagement solutions. The strategy long-term strategic partner bet365. The Company exclusively released on Entain brands in the UK aims to build a safer, more sustainable entertainment launched its casino software across the gaming and across other markets. industry for the benefit of all stakeholders and network of BetMGM, the joint venture between Playtech made a commitment to invest £5 million MGM Resorts International and Entain plc (formerly into initiatives that boost safer gambling behaviours. GVC), for the first time, where it will serve BetMGM Casino, Borgata Online and PartyCasino NJ. New structured Snaitech number 1 New collaboration agreements in LatAm in Italy with RGC Playtech continued to expand its presence in Latin Snaitech maintained its position as the market September 2020 saw Playtech announce a new America with new structured agreements signed in leader for sports betting in Italy in 2020 having collaboration with the Responsible Gambling Guatemala (Tenlot), Costa Rica (Red Cross) and achieved the number one position in the prior year. Council (RGC), the international leader in problem Panama (Caliente). Playtech has a track record Despite the challenges of lockdowns and sporting gambling prevention, awareness and research. of developing newly regulated online markets as cancellations, Snaitech performed impressively The relationship aims to strengthen industry shown by the successful structured agreement across online driven by its leading technology and insights to inform and advance safer gambling, with Caliente in Mexico. Launching with Wplay and brand strength and was the market leader in H2 mental health and digital wellbeing. This collaboration signing structured agreements in three further across online betting and gaming. is one of the first examinations of safer gambling geographies are significant steps in Playtech’s alongside digital wellbeing. growth in Latin America. Extended B2B Omni-channel launch Success at the Gambling agreements with Wplay Compliance Awards In 2020 Playtech announced the extension of its In Q4 2020 Playtech launched its industry-leading Playtech’s compliance team was named long-term agreements with online gambling giants Information Management Solution (IMS) with one Compliance Team of the Year at the VIXIO Mansion and Betfred for another five years and of Colombia’s leading operators, Wplay, to deliver Gambling Compliance Global Regulatory Awards four years, respectively. Further, the Company a data-driven, omni-channel platform. in recognition of its diligent support and guidance announced a five-year extension with Rank Group to employees and customers alike. to exclusively provide its Bingo platform in addition to games content, bringing a number of Rank’s key product verticals to Playtech. Playtech plc Annual Report and Financial Statements 2020 3 Strategic Report Company overview Our purpose At Playtech we create technology that changes the way people experience gambling entertainment A global business Our investment case How we do this Playtech was established at the outset of Playtech is the leading technology provider to Scale and distribution the online gambling industry and its 20 years the global gambling industry, with high operating Retail and online software across over 170 of experience and investment in technology margins and high cash generation. licensees in more than 30 regulated markets. have resulted in unparalleled knowledge This strong financial profile creates the ability to Data and expertise. further extend our leading market position by Data-driven tools and analysis to develop Playtech’s global scale and distribution investing in R&D, targeted strategic M&A, and intelligent platform tools to improve capabilities with over 170 licensees operating in generating value and returns for shareholders. customer experience. over 30 regulated markets and with offices in 24 Read more about Playtech’s investment case on Sustainable Success countries, mean we are ideally positioned pages 10 and 11 Growing our business in a way that has a positive to capture opportunities in newly regulating impact on our people, our communities, the markets and high-growth markets with low environment and our industry. online penetration. Innovation and disruption Delivering new ways for end customers to experience content and services, such as being the pioneer of omni-channel gaming. Regulated jurisdictions Countries with offices Employees >30 24 c.6,400 4 Playtech plc Annual Report and Financial Statements 2020 Strategic Report Strategic Our operations B2B B2C Financials Providing technology to gambling operators Operating directly as an operator in select The Financials division of Playtech, providing globally through a revenue share model. markets and generating revenues from online trading, platform and liquidity technology and gambling, gaming machines and retail betting. services to brokers and end customers. Revenue Revenue Revenue €495m €596m €122m EBITDA EBITDA EBITDA €126m €128m €56m EBITDA margin EBITDA margin EBITDA margin 2525% +75I 2121% +79I 4646% +54I Playtech plc Annual Report and Financial Statements 2020 5 Strategic Report Chairman’s statement Successfully navigating unprecedented times During my time as Chairman, the Board and I worked with the management team to focus the Company’s efforts in three key areas. Firstly, to ensure that we did everything we could to protect our people and their livelihoods in the face of the immediate challenges of the pandemic, and to ensure our customers were well looked after. Secondly, to ensure that Playtech achieved its strategic goals to secure future growth opportunities, particularly in the US and Latin America. And finally, to continue Playtech’s corporate growth with the launch of Sustainable Success, our commitment to grow Playtech in a way that benefits our people, our communities, the environment and our industry