Playtech plc

Firstly, I want to thank you all for attending today. It's been an exciting year for Playtech, and I'm looking forward to taking you through our performance and our plans for the future. On to slide two. I'll begin with the highlights before handing over to Chris McGuinness, our CFO, who will take you through the financials and the outlook. I will then update you on our progress against our strategic priorities and our medium-term plan. Turning now to slide three. I'm pleased to report a strong financial performance in 2024, delivering adjusted EBITDA of €480 million, up 11% year-on-year and slightly ahead of previously raised expectations. This excellent performance was driven by strong momentum in the B2B division, which showed broad-based growth across our core markets and improvements in operating leverage. As a result, we grew B2B adjusted EBITDA by 22% to €222 million, achieving our medium-term adjusted EBITDA target ahead of schedule, while also significantly improving our free cash flow generation. As announced last September, we signed two landmark agreements that will fundamentally transform the future of the group. Firstly, we agreed the sale of Snytek to Flutter for a total enterprise value of 2.3 billion euros, and we are currently awaiting approval from the Italian regulator with completion still expected in Q2 2025. As previously stated, we anticipate paying a special dividend to shareholders of between 1.7 and 1.8 billion euros upon completion of the deal. I want to take this opportunity to thank Fabio and the entire SNAI team for their commitment, achievements, and all their contributions to the group's success since joining the Playtech family in 2018. Under Fabio's leadership, SNA has grown and transformed to become a leading integrated online and retail brand. Secondly, we finalized the revised terms of our strategic agreement with CaliPlay. We have now received approval from the Mexican antitrust authorities, and the deal is due to close on 31st March 2025. Having reached our previous B2B target, we are setting a new medium-term adjusted EBITDA target for continuing operations of 250 to 300 million euros, reflecting the impact of the new Califla agreement. The transformation into a highly focused B2B business is well underway. We are excited to return to our roots and take advantage of the strong growth prospects we see in front of us. I will now hand over to Chris, who will take you through the financial performance and outlook.

Thanks, Maureen. Good morning, everyone. On slide five, I'm now talking through our strong financial results in 2024. Group revenue grew 5% to nearly 1.8 billion euros and adjusted EBITDA increased by 11% to 480 million euros, which is slightly ahead of our previously raised expectations. This excellent performance also is translated into strong free cashflow generation while balance sheet remained robust with net debt declining to 143 million euros at the end of 2024 compared to 283 million a year earlier. Moving to slide six, the strong performance in 2024 was mainly attributable to strong execution within the B2B division. B2B revenues are up 10% driven by broad base growth across our core markets. Adjusted EBITDA margin in B2B expanded by 280 basis points, a strong revenue growth combined with high operating leverage and tight cost control resulted in 22% in adjusted EBITDA growth. Note that while margins did improve significantly in 2024, they will be lower in 2025 due to the new terms of the CaliPlay contract, as well as the accounting treatment of the share of income from associates. In B2C, revenues were up 2% and adjusted EBITDA increased 3% as customer-friendly sporting results led to modest SNITAC revenue growth. Turning to slide seven, looking at B2B in more detail, the performance in 2024 was very strong, with revenue reaching 754 million euros, which is 11% growth on a constant currency basis. Within the division, regulated markets continue to be very strong, with revenues increasing 10% year on year in constant currency. Revenues in Latin America, grew 15% in constant currency, with WPlay in Colombia the biggest driver. On an underlying basis, CaliPlay saw good growth, although additional B2B services fees were negatively impacted by litigation fees, adverse FX movements on the balances owed to Playtech. The U.S. and Canada are growing in scale and becoming a greater contributor to growth in the division, with revenue up 126% in 2024, albeit from a small base, as we continue to execute our strategy there. Looking at Europe, revenues were marginally lower as growth in Spain from the continued shift to online was offset by declines in Greece and Poland due to an EBITDA neutral change in the customer relationship. The UK business saw revenue growth of 5% of constant currency with good growth across multiple licensees and strong demand in the live vertical. Finally, in unregulated markets, revenue increased 15% at constant currency, with strong growth in Brazil and the unregulated provinces in Canada, partially offset by a decline in Asia, although this did stabilize in the second half. Cost control and good operating leverage translated into margin expansion, with B2B adjusted EBITDA growing 22% in 2024 to €222 million. Now onto slide eight, I'll talk you through the highlights from B to C. Snytec saw revenue growth of 1%, with adjusted EBITDA increasing 4%. This overall performance was impacted by customer-friendly sporting results throughout the year, although it was particularly so at the start of 2024. Happybet remained loss-making, and in Q4, we closed the Austrian part of this business. The future of the remaining German part of HappyBet is under review with a closure or a disposal both under consideration. Elsewhere, SunBingo and other B2C saw 7% revenue growth driven by the launch of an additional brand in the second half of 2023. Adjusted EBITDA declined due to increased marketing spend and the impact of affordability checks that began to come into effect in the UK in the second half of the year. Turning now to slide nine, we will look at the net debt bridge. During 2024, we reduced our leverage from 0.7 times at the end of 2023 to 0.3 times. This significant reduction in net debt was due to the strong cash generation in the business, as well as the settlement of the outstanding CaliPlay balances. In Q4, given the strength of our balance sheet, we repaid €200 million of our €350 million bond that matures in March 2026, and we intend to repay the remaining balance with part of the proceeds received from the sale of Snytec. We have also agreed a new €225 million five-year revolving credit facility, which will come into effect following completion of the Snytec sale. Following the completion of the sales NITEC and payment of the anticipated special dividend of between 1.7 and 1.8 billion euros, we expect to be in a net cash position at the end of 2025, giving us flexibility to pursue both inorganic and organic growth opportunities and also consider potential shareholder returns. Turning now to slide 10, where I outlined the levers that will help us achieve our new medium-term targets of adjusted EBITDA of 250 to 300 million euros and free cash flow of 70 to 100 million euros that Mor mentioned earlier. Mor will cover these in more detail later on, but I'll talk briefly about being exposed to the most attractive markets with the right partners, offering innovative content using a variety of business models to suit each operator's needs. Firstly, we are firmly established in some very attractive markets across the world, including Mexico, Colombia, Canada, Italy, Spain, and Poland. We expect these markets to continue to materially contribute to growth in our business. We're also investing in markets which we are very excited about, including the U.S. and Brazil. In the short term, these investments will be an incremental headwind to EBITDA and cash flow, but in time, we anticipate these investments will result in material contribution to earnings and cash flow. As an example, revenues in the U.S. grew more than 150% last year, but generated over $10 million in negative EBITDA losses, mainly due to investment in our three live studios. However, given the expected demand we foresee, we expect these losses to narrow barring any further attractive investment opportunities. We will also continue to maintain our focus on cost efficiencies and addressing underperforming businesses. A review is ongoing to identify inefficiencies in our current processes and our existing footprint and to eliminate duplication. And as more, we'll talk about it in a bit more detail. We're successfully utilizing AI to drive efficiencies and automation. Finally, underperforming businesses. Across the group, we have identified underperforming businesses that in 2024 generated more than 70 million euros of revenue, but had over 20 million of EBITDA losses and more than 25 million of negative free cash flow. 12 million of these EBITDA losses relate to HappyBet, with the Austrian part of this business closed and the remaining German business currently under review, with the decision to be made whether to sell it or close it. The remaining EBITDA losses relate to businesses that are underperforming, and we'll look to address these over the coming quarters. On to slide 11, where I'll give you a quick update on the approval process of two major milestones for our business. First, on Snytech. The transaction is progressing as expected and is currently being reviewed by the Italian Competition Authority, which is the final approval outstanding. The sale and subsequent special dividend remains on track for Q2. Turning to CaliPlay, as we announced last week, the Mexican antitrust approval has now been received and the revised agreement will complete on the 31st of March. As a reminder, following completion, Playtech will hold a direct 30.8% equity stake in CaliPlay Interactive. Finally, moving to slide 12 and the outlook. We've seen a solid start to trading in 2025, reflecting the strong underlying growth trends in the B2B segment. As I discussed earlier, given our confidence in the future of the remaining business, we are announcing new medium-term targets of adjusted EBITDA of 250 to 300 million euros, which includes income from associates and reflects the new structure of the CaliPlay agreement, and a free cash flow target of 70 to 100 million euros, which includes anticipated dividends from CaliPlay. For 2025, we anticipate a CapEx range, including capitalized development, of 90 to 100 million euros, of which the vast majority relates to growth CapEx, such as investment in live studio capacity and additional servers to meet the increasing demand in the business. We expect an effective tax rate of between 25 and 28%, slightly lower than previously due to the sale of Snytech as Italy has a higher corporate tax rate. Given our strong financial performance in 2024 and resilient balance sheet, the board is confident in Playtech's prospects for 2025 and beyond as we transition to a predominantly B2B business. I'll now hand over to Moore, who will give you an update on progress against our strategic priorities.

Thanks, Chris. Onto slide 14. We first presented this slide at the interim results six months ago to showcase how much value still resides within the group going forward post the sale of Snytech. In the Americas, we have multiple equity stakes in high-quality assets in attractive markets. I'll talk about three exciting ones, starting with our most successful structured agreement to date, Kaliplay. Back in 2014, when we signed an agreement, CaliPlay was generating less than 10 million euros in revenue. Ten years later, in 2024, that business generated revenues of more than 850 million euros, with the underlying business continuing to grow strongly with significant market share. The 30.8% equity stake in Kaliplay under the new agreement is hugely valuable in our view. Our other structured agreements are at a much earlier stage than Kaliplay, yet some of these agreements have a huge potential to generate value for Playtex shareholders. In the U.S., our low single-digit equity stake in Hard Rock Digital gives us valuable exposure to the rapidly growing business, and we've already received cash dividends amounting to €3 million in 2024, while the book value of our investment now sits at €141 million, nearly double our original investment. In Brazil, we hold a nominal cost option on 40% of the equity in GaleraBet. The hugely attractive Brazilian market regulated on January 1st, 2025, with GaleraBet being amongst the first batch to receive a license, and GaleraBet has the potential to grow its market share and become increasingly valuable to Playtech. In addition to our valuable equity stakes in the three structured agreements in the Americas, there is the commercial side of our B2B business. The most attractive of these is live casino, which already generates nearly 180 million euros in total, up 15% versus 2023. The decline in EBITDA from 53 million euros in 2023 to 50 million in 2024 in live is primarily due to the lag between investing in increased studio capacity and future growth, particularly in the US and Brazil. Onto slide 15. As we transition to a predominantly pure play B2B business, we have refreshed our medium term strategic priorities, which are now set out. Firstly, we will continue to focus on regulating and regulated markets with a particular emphasis on those markets where we see the biggest potential for growth. Some of these are in the investment phase, such as the US and Brazil, but with a big expected return in the future. Others are more cash generative, such as Colombia and Mexico. While the breadth of Playtech's offering is a key competitive advantage, there are certain segments that present the greatest opportunities, and we are focusing our investment on these areas. Playtech has invested heavily in its live offering, and we believe we will see the benefits of this investment in the coming years through revenue growth and margin expansion. Our casino content is amongst the most popular in many markets, while our PAM Plus platform, the most widely used third-party platform in the world, acts as a channel for distribution, providing another key competitive advantage for Playtech. Given Playtech's future as a highly focused B2B business, there is both an opportunity and a need to enhance operational efficiency. This involves streamlining processes, eliminating duplication, and fostering a more agile organization that can adapt quickly to changing market demands. By reducing duplication and optimizing resources, Playtech can improve cash generation, drive margin expansion, and reinvest in innovation and growth. A leaner, more responsive structure will enable faster delivery of services and solutions to customers, strengthening the company's competitive edge and positioning it for long-term success. Slide 16 will be familiar to you as we have presented it a few times. And as you can see, there is a healthy balance between more mature markets such as the UK and Italy and countries that are early in the regulatory cycle and are set to deliver faster growth. This balance is very important for the following reasons. Firstly, more mature markets are highly cash generative, and this cash can be used to invest into more nascent, faster-growing markets to secure an advantageous position as these markets move towards regulation. Secondly, the relationships with operators in established markets such as the UK can then be leveraged as these operators expand into other, faster-growing countries, providing Playtech with an opportunity to increase its wallet share with these operators. One country that stands out as a potential major contributor to growth is France. In 2024, France saw positive regulatory developments as the government proposed legislation to Parliament to regulate online casinos. At present, only poker sports betting and horse race betting are regulated within the online gaming sector, so the regulation of online casinos would be a positive for Playtech, particularly as we have multiple customers already taking our poker product. Moving on to slide 17. So why are we the go-to technology partner for newly regulating markets? Firstly, we have the broadest product offering in the industry, from the PAM Plus platform to product verticals including casino, live casino, sports, poker, and bingo. This gives operators inexperienced in the online gaming segment a one-stop shop for all their technology needs to take advantage of the online opportunity in a fast-growing market. Secondly, we have a high quality offering in live, the fastest growing product vertical with amazing content and innovation. Thirdly, our platform and casino content is the most popular in the industry, thus providing our licenses with access to content that we know resonates with players on a platform that has the benefit of 25 years of experience embedded into it. Fourth, our services division is an incredible knowledge hub. Playtech has accrued significant experience from partnering with over 200 licenses globally, whether it be in customer acquisition, retention, or risk management and operational know-how. The advantage that this know-how transfer lends to our partners cannot be understated, particularly for businesses that are new to the online segment. Fifth, navigating a newly regulating market can be tricky, and there are many pitfalls to be aware of. Playtech has vast amounts of experience that operators can utilize to ensure regulatory risk is minimized. And finally, both regulators and the gambling industry recognize the importance of developing safer gambling solutions. Playtech has been at the forefront of this process, ensuring gambling customers have access to a safe and secure playing environment. Our safer gambling tools under the banner of Playtech Protect help operators stay ahead of the rapidly evolving responsible gambling standards. Onto slide 18. Here, I would like to update you on our progress in the US and the multiple drivers that will power our future growth. We delivered revenue growth of more than 150% in 2024 in the US due to strong demand from existing clients as well as new launches. Let me talk you through the levers we have to deliver future growth in these hugely exciting markets. Firstly, as the larger T1 operators tend to use their own in-house platform, our opportunity with them is through our content. We've now signed and launched content with each of the largest T1 operators, arguably the hardest part. The plan going forward is to grow our wallet share and we've already started to gain traction. For example, we've launched multiple dedicated tables with DraftKings in each of the three biggest iGaming states. Secondly, we want to capitalize on our platform deals. Platform deals are especially attractive given the value that accrues to Playtech when operators use both our PAM Plus platform and content. And during 2024, two new operators started to utilize our PAM Plus platform with Ocean Casino and Delaware North joining Parks Casino. In the past, a successful strategy we employed was to launch with operators in the UK and then utilize our relationships to expand to other European countries. A similar strategy is being employed in the U.S. when we are launching with operators in one state and then expanding with them to other states, such as with parks and Ross Street. Content in the U.S. has to be tailored for local audiences, and we've worked hard over the past few years to ensure we are getting this right. In 2024, we launched eight branded games tailored specifically to U.S. audiences and includes household titles such as Breaking Bad and The Walking Dead. Lastly, through our landmark agreement with Hard Rock Digital, we have exposure to their unique leadership position for online sports betting in Florida, while the cash generated from Florida supports the successful expansion of Hard Rock Digital into iGaming US states where we benefit commercially. Onto slide 19. Turning to Brazil, which is one of the most exciting and rapidly growing markets in the world. As the seventh most populated country globally, Brazil boasts a dynamic economy and a growing middle class known for its deep passion for sports. Brazil's much-anticipated online gambling and betting market officially launched on the 1st of January 2025, and according to industry forecasts, over the next three years, this market will reach 6.3 billion in GGR, becoming a top three online regulated globally. The industry as a whole faced a difficult transition at the start of 2025 due to some of the strictest onboarding processes in the world, which caused abnormally high KYC rejection rates. This meant that volumes for the industry were lower in January compared to December, with some recovery being seen in February and March. This has impacted us given our exposure to many of the operators in Brazil as a B2B supplier. However, we see this as a temporary issue and remain optimistic of the market's potential growth over the medium term. Regulation of the gambling sector in a country is almost always a net positive over the longer term as it creates barriers to entry, results in a reduction in the number of B2C operators, legitimizes marketing spend, and increases the overall addressable market. Moving on to slide 20. where I'll talk about our strong positions in Mexico and Colombia. CaliPlay, as you know, is a highly valued partner, and together we have built an extraordinary business in Mexico, and our revised agreement sets the foundation for the medium and longer-term growth of the business. While CaliPlay has benefited significantly from the growth in the online market in Mexico, there is still ample room for future growth. International expansion is a key part of Kaliplay's strategy, with Playtech set to play an important role. Recently regulated Peru is the first target market outside of Mexico, and Playtech is expected to be a major supplier of content as well as the platform, demonstrating the strength of our relationship and our technology. W Play, a leading brand in Colombia, saw a very strong performance in 2024 with good revenue growth and a material increase in additional services revenue, while January of this year saw one of the strongest monthly performance for W Play. However, February saw the introduction of a temporary VAT charge implemented on deposits, which is causing uncertainty in the market, and we will see how this situation evolves over the coming months. Despite this headwind in 2025, Colombia remains a very attractive market given its demographics and increasingly wealthy middle class. On to slide 21. Here, I would like to highlight how we are making targeted investments in live and casino content to drive profitable growth. Starting with live casino, where we continue to make great progress with revenues in regulated markets growing 24% year over year, while the number of tables in operations surpassed 450. In the US, following the launches with DraftKings and HardRock Digital, we are increasing capacity across each of our three existing studios to meet the strong demand. Similarly, in Brazil, our innovative tailored content is proving highly popular amongst players and combined with the transition to a regulated market has led us to build a new studio in Brazil, which is due to open later on in 2025. As we invest in physical infrastructure, we are also positioning content innovation by partnering with the world's largest operators. In 2024, together with MGM Resorts International, we pioneered the streaming of live casino content directly from the gaming floors of the iconic Las Vegas properties Bellagio and MGM Grand. Moving on to SaaS. For those that are unfamiliar with our SaaS business, it was launched in 2019 for those operators that do not use the PAM Plus, but want access to our content in a plug and play type SaaS model. We view it as a way to diversify our B2B revenues. Given we have launched over 500 brands and a way to increase our overall addressable market. 24 months ago, we set a medium term revenue target of 60 to 80 million euros. We are delighted to report that we have hit the upper end of this target with SAS revenues up around 60% in 2024 versus 2023, rising to 80 million euros. Onto slide 22. Chris talked you through the emphasis that we are placing on increasing operational efficiency across the B2B business. One tool that has become available to help drive this over recent times has been AI. Playtech has had a long history, going back to 2015, of using AI technologies, specifically machine learning, for example, for internal infrastructure capacity planning and within our responsible gaming product, BetBuddy. What is new, however, is generative AI. Generative AI offers huge potential, both to optimize the efficiency and agility of delivery of our existing products and services, and to offer entirely new capabilities to our customers. I'll give you a couple of examples where we have applied AI across Playtech. We have rolled out GitHub Copilot, an AI-powered coding assistant that helps write code faster and more efficiently to several hundred developers with near-universal positive feedback and improvement in coding quality and quicker task completion. We have also used AI to monitor performance in our studios globally that ensures operational efficiency across over 450 live tables. Just as important is to ensure that there is the appropriate governance and guardrails in place so that we stay compliant with relevant laws and regulations, particularly data security. we must also ensure there is the right balance between managing risk and giving the freedom to our employees to innovate and experiment with what is and will be a hugely impactful technology. In terms of our roadmap for 2025, while I've talked about our use of AI for operational efficiencies, there is arguably a bigger opportunity to generate revenue in terms of our ability to deliver new entertainment experiences. This year, we have already established a program for rolling out cross-product AI solutions across the company, and we are introducing an AI sandbox environment for our employees to test ideas, to give them the freedom to experiment and innovate in a safe and compliant manner. Moving to slide 23. I'm pleased to share the progress that we continue to make towards our 2025 sustainability goals. During the year, we have achieved a number of milestones across all of our commitments. However, today, I would like to highlight our notable progress in the areas of safer gambling and recognize the contribution of our people. In 2024, our award-winning safer gambling solution, BedBuddy, successfully expanded its reach and is now integrated with 23 brands across 14 jurisdictions, including three U.S. states. We also launched an updated version, BadBuddy 3.0, that represents a significant advancement in responsible gambling technology and was recognized as the responsible gambling solution of the year by the prestigious Vixio. We could not have had such a strong performance in 2024 without our most important asset, our people. Amongst the many awards that we have won in recognition of our talent, expertise, and accomplishments, we were acknowledged in a new Times Statista Index that recognizes the world's best companies in sustainable growth, highlighting companies that demonstrated both outstanding financial and environmental performance. Finally, slide 24. 2024 has been a landmark year for Playtech. The sale of Snytech represents a major milestone that not only generates significant value for shareholders, but also fundamentally reshapes our business, returning to our roots as a predominantly pure play, we should add, laser-focused B2B operator. Our strong performance in 2024 and the hitting of our B2B medium-term EBITDA target demonstrates the strength of our B2B offering and sets a strong foundation for our future success. As we look ahead to 2025 and beyond, the ambitious new medium-term EBITDA target and free cash flow target reflect our confidence in the future of the B2B business, while our robust balance sheet provides strategic optionality to pursue inorganic opportunities should the right opportunity arise. The combination of our exposure to the fastest growing regulated markets in the world, our focus on operational efficiencies and improving free cash flow generation, and our hugely valuable equity stakes leaves us optimistic that we are well positioned to drive significant shareholder returns over the coming years. Finally, I would like to say a few words about our chairman who sits in the audience. Brian, Brian Mettingly. Brian, who earlier this year announced this is intention to step down. Brian has been an outstanding chair, offering invaluable guidance, constructive challenge, and unwavering dedication to the team during a time of significant transformation at Playtech. We have benefited enormously from his strong relationships across the industry and his depth of knowledge and experience. His presence on the board will be greatly missed, and we wish him the very best. But before I finish, on a personal note, I'm becoming a little bit touchy. Brian, it has been a privilege having you as... my chairman, and you've been amazing to me and the team and the company and obviously the shareholders. And I feel that it has been a privilege that I call you a true close friend of mine, my family. It has been a privilege for me to have you as my mentor I will miss you. I love you two bits. And I wish you the best of luck. Thank you very much from the bottom of my heart. And I believe that I speak on behalf of the 7,500 plus employees that you guided. You haven't been easy all the time, but you were always constructive and fair. And we love you for that. And I definitely believe strongly that I speak. I truly believe that I speak on behalf of all of the employees of Playtech. Thank you very much. It has been a pleasure, and we have done great things together. Thank you. And now, thank you all for listening. Chris and I will now be very happy to take your questions.

So we'll begin by taking questions in the room, and then once those are exhausted, we'll go to the conference call line.

Hi, good morning. It's Roberta from Investec. A couple of questions from me. The first one is on the underperforming assets. Can you give us a little bit more visibility on if you can say what those assets are? And you mentioned 20 million of EBITDA loss. Is that correct? But does this include, you also said that this includes happy bet, right?

Yeah, so I'll repeat what I said, perhaps, if it wasn't clear, and then I can give a bit more detail. So we've identified... a group of businesses, business units, that in aggregate generated roughly 70 million of euros of revenue in 2024. However, these businesses generated more than 20 million of EBITDA losses and more than 25 million of negative free cash flow. So these underperforming businesses are going to be evaluated in the near future. When you look at them, I think There's a few decisions. You have to look and see are they strategic or not. So that's probably the first point. If they are strategic, then you need to restructure them if you want them to be part of your group and ensure they contribute profitably and get the return on investment that we need. However, if they're not strategic, you then have a decision to either – basically sell or close those businesses. So there's a handful of these that we're going to look at in more depth in the very near future and make decisions along that basis. Happy bet is maybe the most obvious one that I outlined, so those happy bet numbers are included in that. And happy bet, we've made it clear today our intentions are either – sell the business. Realistically, that'd be for a nominal amount. And if that doesn't work out, we will shut that business down. And then the others will follow afterwards.

Okay, so a second question, if I may. You basically doubled the book value of Hard Rock Digital compared to when you bought the stake. When do you think that this is going to be contributing also to your financials? And what are their expansion plans at the moment? What are the next steps?

Maybe I'll start and Mark can perhaps add. Yeah, Craig, I think just as a recap on Hard Rock, we made that investment roughly two years ago. It was $85 million at the time. Just to remind everyone, at the time, they were not operating in Florida. There was still a legal overhang. They have since launched sports betting in Florida, and they launched in late 2023, and 2024 was a full year of operations. And then they've used some of the cash generated in Florida to expand more aggressively in certain other markets, including New Jersey, where we work with them. So I'd say in Florida, we don't do anything commercially with them because it's sports betting. and our deal with them is mostly content. However, in New Jersey, we do partner with them, and we've started to see an increase in our revenues with them in New Jersey, for example, particularly in the second half of the year. Not huge numbers yet, but it's starting to benefit us commercially. Under broader expansion plans, perhaps more can touch on that.

Yeah, I will just say that obviously they have been more than just successful in Florida, as expected. And some of that money is then reinvested into other territories. As you know, they acquired certain assets from another operator, providing them with a market access into different iGaming states and other sports betting states. So I will say that the way we benefit from them is obviously through dividends, right? And I just referred to 3 million euros of dividends that we received in 2024. And we believe that they will continue to go from strength to strength, so we expect more in the future. But beyond that, commercially, currently it's very focused on New Jersey, but there are certain plans to extend beyond New Jersey to other territories, iGaming states where Playtech will contribute. to how drug can benefit commercially. There are other plans that they look into. Obviously, the brand is one of the most popular brands worldwide. It's an iconic brand, and they have a lot of, they see levels of brand recognition in certain territories outside of the U.S. that are highly attractive. I won't refer to specific countries, but obviously, it is something that they refer to and I can say they look into. And obviously in these markets, Playtech will play a broader role than in the U.S., and I think that there is an additional opportunity for us to benefit significantly commercially from this relationship. It's a strategic relationship. When we invested into it, we saw hard rock. They treated us and we treated them as strategic partners going into certain states in the U.S. as well as outside of the U.S. should they choose to do that and when they do that.

Morning. Thank you. Ivor Jones from Peel Hunt. Can we talk about Caliente? Is it currently capable of having licenses in U.S. states? And if it chose to enter U.S. states, does Playtech have any control over what it spends on marketing in order to drive growth? Is there potentially a step down in Caliente profitability in order to drive growth in new markets?

I would say the following. Obviously, everyone knows that in 2021, they were looking to do a SPAC in the U.S. with the intention to penetrate the U.S., and I think that it tells you a lot. I won't refer specifically. It's not a question for us. It's for them. We are a minority shareholder in this business, so there is as much we can say. However, I will say that I have a lot of confidence in their ability to expand beyond Mexico to other territories. We refer to the first country outside of Mexico, Peru. And obviously, on a longer-term basis, I don't see any reason why they should not penetrate the U.S. and establish themselves in the U.S. But obviously, they need to establish that this is commercially the right thing for them and time that with other investments, both in Mexico and other territories outside of Mexico and the U.S. before they do that. Obviously, they will spend more in Mexico, but Mexico continues to grow. And obviously, there is a lot of room, given how cash-generative this business is, how profitable this business is, and the amazing team that they have there. The management team of CaliPlays is, I think, almost unparalleled in our sector. They have an amazing team, very tied together. We enjoy a very good relationship. I know that people asked me about that before. We continue to enjoy a great relationship, and we truly believe in their capabilities. And their capability is not only to extend within Brazil, but to extend beyond Brazil. Sorry, Mexico. If they choose to extend beyond Mexico, obviously we will support it. We will remain supportive, and they will have to balance that between the investments in Mexico, investments into other territories, and obviously the profitability of the business or the cash they generate.

Okay, thank you. And can I continue with Caliente and talk about the December 24 book value following on from Roberta's point? It's less than one-time sales for a high-margin business. If we could see the underpinning calculations, is there any economic reality that we would all connect with in that 800-plus million euro number, or is it a kind of technical exercise we shouldn't be looking at because it's backward-looking?

Yeah, I'm happy maybe offline to talk you through a lot of the moving parts in more detail. But at a high level, it is an accounting requirement for us to value that asset at each reporting period. And over the last several years, you can see the value on our books has gone up significantly, which I think reflects the trajectory of that business over that time period. There's a few things I'd take into consideration. It is a You know, it is a private business. It is a private business in which we are minority shareholders. So all these things, you know, have to be taken into consideration. Ultimately, it operates in Mexico as well, so a discount rate reflects that. And I think there's also a, you know, all these – I don't need to tell you and the others, but, you know, when you're doing evaluation of anything, you know, just sensitivities around certain inputs, and, you know, I think – We have to make it as accurate as possible. There's some judgment involved. And on balance, if we have the opportunity to be conservative, I think that's the prudent thing to do. So I think it's fair to say that that stake is potentially worth more, but there's a lot of different factors that go into valuing it.

The value in the books is for our stake, right? Just to make it, right?

So basically what you have is for the 30.8% that we have. Yeah, correct. So you're one time. So the one time is not really one time, right? Yeah, yeah, you're absolutely right.

That makes a lot more sense than I should have thought. Can I just check that that calculation is forward-looking? So it anticipated the change in the structure of the deal.

Yes, correct, yeah. Even as September, when we did our half-year results, because we had signed the agreement, the value as September effectively included the changes. So it was, you know, basically put a very high probability on this deal completing, which will complete on Monday, which includes the transfer of the option we held previously over 49% into the 30.8%. It's not a direct, but, you know, into a 30.8% equity stake. So all that has been factored in both at the September results from the 30th of June and at these full year results. Great.

Thank you. And thank you for picking that up more. On the live side, how much of live comes from regulated markets and in regulated markets, given the labor cost, what sort of profit margin can that business be at maturity? Thank you.

Live is, well, With Brazil, so in 24, Brazil was unregulated, right? So that was in the unregulated portion. But effective the 1st of January, and Brazil live is one of our biggest live markets. When that moves to being regulated, or as it did on the 1st of January, the live business will actually be nearly 80% regulated, right? Now, in terms of labor costs, there's a few variables there, right? Because it depends on the local regulation. So in the U.S., you have to have your facilities in-state. So New Jersey, Pennsylvania, Michigan is where we have. So then you have the local labor costs. Elsewhere, if the regulation allows, obviously, many of you have seen our facility in Riga and Latvia, for example, but we also have similar facilities in what I'll call lower cost locations like Romania, Peru, places like that, where you can serve multiple countries from and obviously get more efficiency, if you will, from a cost perspective. So it depends on the you know, what the regulation allows from one jurisdiction to another. I would say without putting a number on it, there's significant room for margin expansion within live.

Great.

Thank you.

Are there any more questions in the room? Hi, morning. Richard Stuber from Deutsche Neumis. Just a couple of follow-ups, please. On Caliente, on the state, can you just remind us whether there are any restrictions around the monetization of it? So can Caliente sort of block the sale of a state to a particular party, or do they have some right of first refusal? And the second question on Brazil, and I know you say that Brazil is now going to be classified as a regulated market now, so... what sort of revenues did Brazil make in last year so we can see how that exposure has fallen? And also in Brazil, is GaleraBet now sort of a top ten operator, or do you know roughly where that stands in the market? Thank you.

On Cali and the stake, I don't know if we'll get into the specifics of a very detailed and complex contract. I think in reality when it comes to selling it, Regardless of any restrictions we may have or not, I don't know necessarily that would make sense for us to sell it unless it was part of a bigger transaction. Because if you're thinking of buying a minority stake in a business like that, I don't know you'd want to, you know, from a buyer's perspective, if you'd want to buy it without it being part of potentially a bigger transaction. But that's all very hypothetical, to be clear. Yeah. On Brazil, the revenues, we don't disclose the exact figure, but it's a few tens of millions, if you will. And that's going to move. So it's going to change. I talked about live earlier, but our overall B2B, it'll take the regulated portion of B2B as a whole to not far off 90% overall regulated revenues. And I think Galera about market share is awesome.

Yeah, when we talk about Brazil, obviously there was this hiccup of the, I would say, the most sophisticated, most advanced set of regulation I ever saw across our industry, more than the U.S., more than the U.K. in Brazil, which is unheard of. So obviously it had an impact, but we already see the operators recovering from that and We're established with the largest operators in the market. We're established with GaleraBet. GaleraBet is not yet a top 10 operator. It's a group of brands. It's not necessarily just Galera. Galera also includes and holds a stake in two other brands called LuvaBet and F-12. Between the three of them, there are 10 to 20 top operators in the country, actually 10 to 15 top operators in the country, but it is rapidly growing and they have big expansion plans. Brazil, on a short, medium, and longer term, taking a short, medium, and longer term view, Obviously, it's a very exciting market, one of the most exciting markets, I believe. The government only just started pushing out and enforcing and pushing out illegal operators that have not yet obtained the license. So there is still a lot of potential in the market. And I will say, I'm not sure if everyone is familiar, but Playtech won a tender for Kaisha. Caixa is one of the largest banks in the country. It's also the lottery operator. They operate 18,000 outlets, not far from 10,000 bank branches. One of the most well-recognized brands in Brazil. I don't think that you will find a single person in Brazil that is not familiar with the brand. So we want the tender to operate on a B2B basis, the business, and we are very, very excited about that. So altogether, when you think about our position in Brazil, we are established with the largest and leading operators in Brazil. We have access in a nominal 40% option or an option for 40% of Galera, the group of Galera, LubaBet, and F12 operators. and just won the tender for Caixa. All of that obviously makes us very excited about and very passionate about the Brazilian market.

And as a whole, I'll just add, beyond those customers, we do have more than 10 customers in total in Brazil, if you include our other perhaps more traditional licensees.

If there are no more questions in the room... Shall we go to the audio line?

Thank you very much. If you have a question, please press star for number one on your telephone keypad now. If you change your mind, please press star for number two. Preparing to ask your question, please ensure your device is unmuted locally. We now have a question from Ed Young from Morgan Stanley. The line is open. Please go ahead.

Good morning. Thank you. I think my questions on Brazil have been well answered, so thank you for that detail. The second one I had was on Asia. There's some commentary around changes in the distributor agreements. I just wanted to give a bit more colour on that, and if you could give us an idea of how much unregulated revenue China is still. I mean, you don't specifically disclose it, but a ballpark could be helpful. I was just sort of thinking that given some of the changes being made by a large operator who's also a big partner of yours globally. Did you or would you consider coming out of that market entirely? You've obviously been talking about focusing more and more on regulated markets over the past few years. Also, given the current ash generation in your incentive targets, does that not sort of make sense? And then the other question was really just on the board. You know, you gave some touching words about Brian there. I wanted you to give us an update on how the replacement process is going. There's also been some other sort of non-exempt departures. I think one of your board members is now sort of in every committee. So are you also considering sort of an internal promotion to chair from the existing set of directors? Just some colour on that would be great. Thank you.

Okay, a few things there. Maybe the middle question on China. Yes, certainly one of our customers announced in the last few days that they're exiting China. I think China overall has not been a focus for us for many years, so it's not a particularly large market, and it's not even our largest market in Asia at this point. So there will be a small impact to us, but you're talking low, mid, single-digit, millions on a, on an annual basis, uh, from, from that. Um, and overall on Asia, um, you know, strategically more may want to talk about this in more, more detail, including in regards to your question about distributors. Uh, but, but overall our business in Asia is, you know, the focus, um, both with our previous distributors and the new one is, is on markets outside of China and other markets, including some regulated markets, uh, in Asia or perhaps soon to be regulated markets in Asia. Maybe I'll just touch on the chairman board question, and then I'll hand over to Maura to give some more details on Asia. On the chairman and board process, to be honest, it's not really for Maura to comment on. There is a process ongoing that's being led by Brian and the other board members. My understanding is that's progressing well. We'll have an update for you in due course around a new chairman. Beyond that, in terms of other potential board members, I think that's something – the new chairman can evaluate when they begin and decide, you know, look at the board as a whole and, you know, see any gaps and look at the composition and make decisions then. So not much of an update necessarily other than I believe things are progressing and we'll have an update for you in due course.

So on China, I will just further elaborate and say that for a number of years since 2018, when there was this massive change in Asia, in the market and for us, the contribution of China was very, very minimal. And with the recent news about one operator leaving the market, it will be almost non-existent. Our Asian revenues are coming from other territories. And like I said, going forward, China will be very, very small to non-existent for Playtech in terms of its contribution to the overall revenues. Beyond that, I will say that what we came to learn in recent a year ago is basically that we need to consolidate the two areas. the two distributors that we had we felt that the internal competition between the two is not the right thing to do specifically in a very price sensitive market or set of markets and we decided to consolidate when when we evaluated the options that we have either consolidated under one of them or looking elsewhere we came to realize that actually there is a someone else that can do a better job given the fact that they are established in in the area And most importantly, they have access to certain regulated activities across Southeast Asia. They introduced those to us. We will establish ourselves with those activities recently, not recently, but relatively quickly. And they have access to different other operators across the market. We felt that this is the right thing to do, not only consolidate, but actually terminate the existing agreements that we had back then and replaced it with one operator that is well established across Asia. And as I said, most importantly, have access to regulated formats across Southeast Asia locally in certain markets. That's it.

Okay, so we should expect an increasing contribution of Asia revenue to be regulated. Is that what you're saying essentially?

Yes, it's obviously, it's early days and we are about to launch with them, with one of such operators. We developed certain other initiatives with other potential partners across Southeast Asia. We're in discussions in different countries that consider regulating. We take a longer term view as we take it in each and every regulated market or soon to be regulated market or any other market that consider regulating the market. I wouldn't jump to any conclusion. It will obviously be slow, but I think that it's headed in the right direction, and you will definitely, hopefully, will see some regulated revenues coming out of Southeast Asia. And I hope yet truly believe that this distributor will do a great job, and we will also see some growth in our other activities in Asia that we currently have. Okay, thank you. Just to put it into perspective, obviously our focus, guys, let's not forget U.S., let's not forget, you know, Brazil, let's not forget Latin America, Mexico, Colombia, certain other territories where we are already established, certain other territories outside in Eurasia, but also Australia, New Zealand, where there are certain opportunities, Africa. So Obviously, there are a lot of other opportunities in regulated markets. The focus of the company is regulated territories. Our investments in Asia included will hopefully turn, and we expect it to turn, I expect it to turn into regulated activities over time. And that's the good, I think this is the encouraging, and I think this is all good news for us and for the industry as a whole.

We now have a question from Mark Watts from Citibank. Your line has been opened. Please go ahead.

Hi, guys. Thanks for hosting the call. I just had a question more around capital allocation and how you look at the 26 and 28 bonds. Obviously, the 26 is a small stub and 28 is not too large either. So when you look at your capital allocation and financial policy, would you intend to refinance both those bonds simultaneously? Second of all, I guess, is just the general gross debt amount. I see that you guys obviously aim to be net cash and potentially look at M&A and shareholder returns. But have you been speaking to rating agencies about investment grade aspirations or how do you see under gross debt and leverage profile of the business kind of going forward post B2C sales? Thanks, guys.

Yeah, I'll cover those. Okay, first, 26 and 28 bonds. The 26 one's fairly straightforward. We've already announced that we're going to repay that with part of the proceeds from the sale of Snytech. It was a $350 million bond. We repay $200 million in December. The remaining 150 will be repaid, you know, likely later in Q2, you know, depending on the timing of the Snitex sale. But that will be repaid. That will leave us with the 2028 300 million bond that matures in June. June of 2028. That bond, to be honest, it's still more than three years away, so we have no immediate plans for that. I think some debt needs to remain part of our capital structure. Potentially the biggest opportunity with that one is at some point to refinance it at a lower coupon. It's at 5875 at the moment, and I I believe our bonds that trade are currently in the mid to low fours. So there potentially is an opportunity at some point to refinance that at a lower coupon. But to be honest, that's not an immediate priority. We are in regular dialogue with the rating agencies, S&P and Moody's, that rate our bonds. I think for now, we're just, you know, educating them on the changes to Playtech in terms of, you know, Snytech, you know, leaving the group in the... in the near future and also what the remaining group looks like. So we're in a regular dialogue with them about our ratings. To be honest, we're not so much focused on any sort of ratings targets or anything like that at this point in time, just, you know, keeping them up to speed on the, the changes the group is undertaking and also acknowledging the fact we are going to be a much smaller group, which is something rating agencies take into account when determining their ratings. We will be in a slight net cash position, I think, following completion. of the sale of Snytec and paying the dividend. I think that gives us a lot of flexibility going forward. I do expect that to stay part of our capital structure because that's the most efficient way, in my opinion. Over time, I think we'd probably like to be in a slight leverage position, but we'll take our time and evaluate the opportunities that are out there. And as always, we'll remain quite prudent with our capital structure.

We currently have no further questions, so I'll hand back to the management team for closing remarks.

Okay, so I think that's a wrap. So I'd just like to thank you all for attending in person and for those that have joined the audio conference call as well. So thank you.

Thank you. Thanks, everyone. Have a great day.