Company Registration No. 07728726 (England and Wales)
PLAYTIKA UK - HOUSE OF FUN LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
PLAYTIKA UK - HOUSE OF FUN LIMITED
COMPANY INFORMATION
Directors
Tian Lin
Ron Korczak
Craig Abrahams
Company number
07728726
Registered office
Quadrant House - Floor 6
4 Thomas More Square
London
E1W 1YW
Auditor
UHY Hacker Young
Quadrant House
4 Thomas More Square
London
E1W 1YW
PLAYTIKA UK - HOUSE OF FUN LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 6
Independent auditor's report
7 - 9
Income statement
10
Statement of financial position
11 - 12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 35
PLAYTIKA UK - HOUSE OF FUN LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 1 -
The directors present the strategic report for the year ended 31 December 2019.
Section 172 Statement
The Directors insist on high operating standards and fiscal discipline and routinely engage with management and employees of the company to understand the underlying issues within the organization. Additionally, the Board looks outside the organization at macro factors affecting the business. The Directors consider all known facts when developing strategic decisions and long-term plans, taking into account their likely consequences for the Company.
The Directors and management are committed to the interests and well-being of Playtika UK House of Fun’s employees. Playtika UK House of Fun is committed to the highest levels of integrity and transparency possible with employees and other stakeholders. Safety initiatives, consistent training, strong benefit packages and open dialogue between all employees are just a few of the ways the Company ensures its employees improve skill sets and work hand-in-hand with management to improve all aspects of the Group’s performance.
Other stakeholders include, customers, suppliers, debt holders, industry associations, government and regulatory agencies, media, local communities and shareholders. The Board, both individually and together, consider that they have acted in the way they consider would be most likely to promote the success of the Company as a whole. In order to do this, there is a process of dialogue with stakeholders to understand the issues that they might have. Playtika UK House of Fun believes that any supplier/customer relationship must be mutually beneficial and the Company is known for its commitment to details to its customers. Communications with debt holders and shareholders occur on an ongoing basis and as questions arise. The company also communicates through social media.
The Directors are committed to positive involvement in the local communities where we operate. Additionally, Playtika UK House of Fun strictly follows environmental regulations and supports sustainability practices where possible.
Integrity is a key tenet for Playtika UK House of Fun’s Directors and employees. Playtika UK House of Fun believes that any partnership must benefit both parties. We strive to provide our stakeholders with timely and informative responses and are always striving to meet or exceed customers’ needs.
The Board recognises its responsibilities under section 172 as outlined above and has acted at all times in a way consistent with promoting the success of the Company with regard to all stakeholders.
PLAYTIKA UK - HOUSE OF FUN LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 2 -
Review of the business
Playtika UK - House of Fun is a pioneer in the social games space, introducing free-to-play slots games to social networks. It is the creator of the popular game House of Fun, operates across multiple social networks and platforms including Apple iOS, Google Android, Facebook, Amazon and Windows. House of Fun is played by nearly 1 million people every day in 166 countries on 5 platforms. The company made a profit after taxation of $56,411,210 (2018: $67,478,198). Dividends of $nil (2018: $63,000,000) were paid. The company's net assets at 31 December 2019 were $168,360,904 (2018: $75,559,694).
Key performance indicators
We measure our online business by using several key financial metrics, which include revenue, adjusted EBITDA before exchange rate gains or losses, ARPU and ARPPU, and operating metrics, which include DAUs, MAUs and MUUs. References to “DAUs” mean daily active users of our games, “MAUs” mean monthly active users of our games, “MUUs” mean monthly unique users of our games, “MUPs” mean monthly unique payers of our games, “ARPU” means average daily revenues per average DAU and "ARPPU" which means average revenue to per paying user. Unless otherwise indicated, these metrics are based on internally-derived measurements across all platforms on which our game is played. Our operating metrics help us to understand and measure the engagement levels of our players, the size of our audience and our reach. Our major key metrics for 2019 are noted in the table below:
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Average DAUs 812,253 718,740 673,879 657,313
Average MAUs 3,061,417 2,592,760 2,487,976 2,441,773
Average MUPs 22,483 21,710 20,321 20,453
Net ARPU 0.60 0.70 0.67 0.68
Net ARPPU 21.59 23.14 22.34 21.69
ADJ EBITDA 25,575,910 26,907,825 25,956,548 22,339,067
Principal risks and uncertanties
If our game does not maintain their popularity, our results of operations could be harmed.
For a game to remain popular, we must routinely enhance, expand and/or upgrade the game with new features and content that players find attractive. Such enhancement requires the investment of significant resources, integration into new platforms, introduction of new languages, expansion into new jurisdictions and often presents new marketing and other challenges. We may not be able to successfully enhance, expand or upgrade our current library of games. Any decrease in the popularity of our online and mobile games, any breach of game-related security or prolonged server interruption, any loss of rights to any intellectual property underlying such games, or any other adverse developments relating to our most popular games, including House Of Fun, could have a material adverse effect on our business, financial condition or operating results.
PLAYTIKA UK - HOUSE OF FUN LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 3 -
Tian Lin
Director
29 December 2020
PLAYTIKA UK - HOUSE OF FUN LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2019.
Principal activities
The principal activity of the company continued to be that of the provision of social gaming.
Results and dividends
The results for the year are set out on page 10.
Going Concern & Covid-19
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The company markets a diverse product base across the industry sector and operates in varied market sectors and from a number of operational bases.
Whilst Covid-19 has negatively impacted some areas of business, the ability to respond to the rise in the requirement for hand sanitiser and related cleaning products and components, and to rapidly convert manufacturing facilities to production of such, the overall impact on the business has been positive.
By strict adherence to Covid-19 guidelines, the company has been able to maintain production at all operational sites throughout lockdown.
By use of latest technologies, all aspects of commercial and administrative requirements have been handled remotely, and only in recent days have we seen any form of return to office working – again strictly managed, and subject to amended guidelines.
Liquidity is crucial to the business during these unprecedented times, and it is something that is monitored on a daily basis. Profitable trading, and judicious use of government support measures, mean that the company is working well within the limits of its funding facilities.
This situation will continue to be monitored closely.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Tian Lin
Ron Korczak
Craig Abrahams
PLAYTIKA UK - HOUSE OF FUN LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 5 -
Supplier payment policy
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
-
settle the terms of payment with suppliers when agreeing the terms of each transaction;
-
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
-
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 1 day's purchases, based on the average daily amount invoiced by suppliers during the year.
Research and development
The company has invested $37.1m (2018: $38.1m) in research and development during the financial year. The company continues to focus on developing technologies to enhance the app and its user engagement.
In addition the company has capitalised expenditure of $1.8m for expenditure in the development phase for an internal research and development project where the company is satisfied that the criteria for an intangible asset are met
Auditor
The auditor, UHY Hacker Young, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:
-
properly select and apply accounting policies;
-
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
-
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
-
make an assessment of the company's ability to continue as a going concern.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
PLAYTIKA UK - HOUSE OF FUN LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 6 -
Statement of disclosure to auditor
Each director in office at the date of approval of this annual report confirms that:
-
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
-
the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
On behalf of the board
Tian Lin
Director
29 December 2020
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PLAYTIKA UK - HOUSE OF FUN LIMITED
- 7 -
Opinion
We have audited the financial statements of Playtika UK - House of Fun Limited
(the 'company')
for the year ended 31 December 2019 which comprise the income statement, the statement of financial position, the statement of changes in equity, the statement of cash flows and
notes to the financial statements, including a summary of significant accounting policies
. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its profit for the year then ended;
-
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PLAYTIKA UK - HOUSE OF FUN LIMITED
- 8 -
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PLAYTIKA UK - HOUSE OF FUN LIMITED
- 9 -
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements
.
A further description of our responsibilities for the audit of the financial statements is located on the
website of the Financial Reporting Council at: http://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Matthew Anderson (Senior Statutory Auditor)
for and on behalf of UHY Hacker Young
31 December 2020
Chartered Accountants
Statutory Auditor
PLAYTIKA UK - HOUSE OF FUN LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 10 -
2019
2018
Notes
$
$
Revenue
3
235,157,076
252,880,945
Cost of sales
(63,170,159)
(69,701,734)
Gross profit
171,986,917
183,179,211
Administrative expenses
(96,533,374)
(97,588,398)
Operating profit
4
75,453,543
85,590,813
Investment revenues
6
-
1,705,576
Finance costs
7
(3,038,838)
(1,777,554)
Profit before taxation
72,414,705
85,518,835
Income tax expense
8
(16,003,495)
(18,040,637)
Profit and total comprehensive income for the year
56,411,210
67,478,198
The income statement has been prepared on the basis that all operations are continuing operations.
PLAYTIKA UK - HOUSE OF FUN LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
31 December 2019
- 11 -
2019
2018
Notes
$
$
Non-current assets
Intangible assets
10
1,895,407
-
Investments
11
209,432,606
24,031,765
Deferred tax asset
18
633,379
659,816
211,961,392
24,691,581
Current assets
Trade and other receivables
13
21,836,476
24,300,596
Cash and cash equivalents
15,940,682
190,632,249
37,777,158
214,932,845
Total assets
249,738,550
239,624,426
Current liabilities
Trade and other payables
17
63,748,895
151,204,988
Current tax liabilities
10,756,877
10,236,175
74,505,772
161,441,163
Net current (liabilities)/assets
(36,728,614)
53,491,682
Non-current liabilities
Trade and other payables
17
6,871,874
2,623,569
Total liabilities
81,377,646
164,064,732
Net assets
168,360,904
75,559,694
Equity
Called up share capital
21
528
528
Share premium account
22
42,102,866
5,712,866
Retained earnings
126,257,510
69,846,300
Total equity
168,360,904
75,559,694
PLAYTIKA UK - HOUSE OF FUN LIMITED
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2019
31 December 2019
- 12 -
The financial statements were approved by the board of directors and authorised for issue on 29 December 2020 and are signed on its behalf by:
Tian Lin
Director
Company Registration No. 07728726
PLAYTIKA UK - HOUSE OF FUN LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
- 13 -
Share capital
Share premium account
Retained earnings
Total
Notes
$
$
$
$
Balance at 1 January 2018
528
5,712,866
65,368,102
71,081,496
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
67,478,198
67,478,198
Dividends
9
-
-
(63,000,000)
(63,000,000)
Balances at 31 December 2018
528
5,712,866
69,846,300
75,559,694
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
-
56,411,210
56,411,210
Issue of share capital
21
-
36,390,000
-
36,390,000
Balances at 31 December 2019
528
42,102,866
126,257,510
168,360,904
PLAYTIKA UK - HOUSE OF FUN LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 14 -
2019
2018
Notes
$
$
$
$
Cash flows from operating activities
Cash (absorbed by)/generated from operations
25
(5,290,125)
196,431,133
Interest paid
(3,038,838)
-
Tax paid
(15,456,356)
(13,826,402)
Net cash (outflow)/inflow from operating activities
(23,785,319)
182,604,731
Investing activities
Purchase of intangible assets
(1,895,407)
-
Purchase of subsidiaries
(185,400,841)
(24,031,765)
Interest received
-
1,705,576
Net cash used in investing activities
(187,296,248)
(22,326,189)
Financing activities
Proceeds from issue of shares
36,390,000
-
Dividends paid
-
(63,000,000)
Net cash generated from/(used in) financing activities
36,390,000
(63,000,000)
Net (decrease)/increase in cash and cash equivalents
(174,691,567)
97,278,542
Cash and cash equivalents at beginning of year
190,632,249
93,353,707
Cash and cash equivalents at end of year
15,940,682
190,632,249
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 15 -
1
Accounting policies
Company information
Playtika UK - House of Fun Limited is a private company limited by shares incorporated in England and Wales. The registered office is Quadrant House - Floor 6, 4 Thomas More Square, London, E1W 1YW.
The company's principal activities and nature of its operations are disclosed in the directors' report.
1.1
Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
The financial statements are prepared in $, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group
.
Playtika UK - House of Fun Limited is a wholly owned subsidiary of Playtika Holding Corporation and the results of Playtika UK - House of Fun Limited are included in the consolidated financial statements of Playtika Holding Corporation which are available from the registered office.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 16 -
1.2
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
true
The company markets a diverse product base across the industry sector and operates in varied market sectors and from a number of operational bases.
Whilst Covid-19 has negatively impacted some areas of business, the ability to respond to the rise in the requirement for hand sanitiser and related cleaning products and components, and to rapidly convert manufacturing facilities to production of such, the overall impact on the business has been positive.
By strict adherence to Covid-19 guidelines, the company has been able to maintain production at all operational sites throughout lockdown.
By use of latest technologies, all aspects of commercial and administrative requirements have been handled remotely, and only in recent days have we seen any form of return to office working – again strictly managed, and subject to amended guidelines.
Liquidity is crucial to the business during these unprecedented times, and it is something that is monitored on a daily basis. Profitable trading, and judicious use of government support measures, mean that the company is working well within the limits of its funding facilities.
This situation will continue to be monitored closely.
1.3
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 17 -
We primarily derive revenue from the sale of virtual items associated with our online games.
The Company distributes its games to the end customer through Digital Storefronts and social networks. Within these Digital Storefronts, users can download the Company’s free-to-play games and can purchase virtual currency to obtain virtual goods or virtual goods directly (together, defined as “virtual items”).
The Company recognises revenue at an amount which reflects the consideration that the Company expects to be entitled to receive in exchange for transferring goods or services to its customers.
For purposes of determining when the service has been provided to the player, we determined that the company's performance obligation is to provide on-going game services to players who purchased virtual items to gain an enhanced game-playing experience.
Accordingly, we categorise our virtual items as either consumable or durable. Consumable virtual items represent items that can be consumed by a specific player action. Most of our revenue consists of consumable virtual items, common characteristics of consumable virtual items may include items that are no longer displayed on the player’s game board after a short period of time, do not provide the player any continuing benefit following consumption, or often times enable a player to perform an in-game action immediately. For the sale of consumable virtual items, we recognise revenue as the items are consumed, which is usually up to one week. Durable virtual items represent items that are accessible to the player over an extended period of time. We recognise revenue from the sale of durable virtual items rateably over the average estimated consumption time of the durable virtual item or the estimated average playing period of payers which is usually up to 1 year.
Advance payments received from customers for virtual items that are non-refundable and relate to non-cancellable contracts that specify our obligations are recorded to contract liabilities.
For most of the revenues generated from consumption of virtual items the Company has determined that it is generally acting as a principal and is the primary obligor to its end-users. Therefore, the Company recognises revenue related to these arrangements on a gross basis, when the necessary information about the gross amounts or platform fees charged, before any adjustments, are made available by the Digital Storefronts.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 18 -
1.4
Intangible assets other than goodwill
An intangible asset shall be recognised only when it is probable that the economic benefits associated with the asset will flow to the
company
and the cost of the asset can be measured reliably. Intangible assets are measured initially at cost. However, intangible assets acquired in a business combination not involving entities under common control with a fair value that can be measured reliably are recognised separately as intangible assets and initially measured at the fair value at the date of acquisition.
The useful life of an intangible asset is determined according to the period over which it is expected to generate economic benefits for the
company
. An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the
company
.
Intangible assets having a definite useful life are mainly developed games, user base, licenses and others. An intangible asset with a definite useful life is amortised using the straight-line method over its useful life. For an intangible asset with a definite useful life, the
company
reviews the useful life and amortisation method at least at each year end and makes adjustment if necessary.
The
company
classifies the expenditures on an internal research and development project into expenditure on the research phase and expenditure on the development phase. Expenditure on the research phase is recognised in profit or loss as incurred.
Expenditure on the development phase is capitalised only when the
company
can demonstrate all of the following: (i) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (ii) the intention to complete the intangible asset and use or sell it; (iii) how the intangible asset will generate probable future economic benefits (among other things, the
company
can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset); (iv) the availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and (v) the ability to measure reliably the expenditure attributable to the intangible asset during the development phase. Expenditure on the development phase which does not meet these above criteria is recognised in profit or loss when incurred.
The useful lives of the intangible asset
is 3 years.
1.5
Non-current investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 19 -
1.6
Impairment of tangible and intangible assets
At each reporting end date, the
company
reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 20 -
Financial assets at fair value through profit or loss
Financial assets are classified as at FVTPL when the financial asset is held for trading. This is the case if:
-
the asset has been acquired principally for the purpose of selling in the near term, or
-
on initial recognition it is part of a portfolio of identified financial instruments that the
manages together and has a recent actual pattern of short-term profit taking, or
-
it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Interest and dividends are included in 'Investment income' and gains and losses on remeasurement included in 'other gains and losses' in the statement of comprehensive income.
Financial assets held at amortised cost
Financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as held to maturity investments.
Held to maturity investments are measured at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Trade Receivables
, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 21 -
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Financial assets classified as available for sale are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income. Where an AFS financial asset is disposed of or determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss.
Dividends and interest earned on AFS financial assets are included in the investment income line item in the statement of comprehensive income.
Impairment of financial assets
Financial assets, other than those
measured
at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 22 -
The company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the company expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
General approach
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
At each reporting date, the company assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.
For debt investments at fair value through other comprehensive income, the company applies the low credit risk simplification. At each reporting date, the company evaluates whether the debt investments are considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the company reassesses the external credit ratings of the debt investments. In addition, the company considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 23 -
The company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the company may also consider a financial asset to be in default when internal or external information indicates that the company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Debt investments at fair value through other comprehensive income and financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below:
Stage 1 - Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs.
Stage 2 - Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs
Stage 3 - Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs
Simplified approach
For account receivables and receivables due from third-party game distribution platform and payment channels and contract assets that do not contain a significant financing component or when the Company applies the practical expedient of not adjusting the effect of a significant financing component, the Company applies the simplified approach in calculating ECLs. Under the simplified approach, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
For accounts receivable that contain a significant financing component, the Company chooses as its accounting policy to adopt the simplified approach in calculating ECLs with policies as described above.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 24 -
1.9
Financial liabilities
The company recogni
s
es financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either
'
financial liabilities at fair value through profit or loss
'
or
'
other financial liabilities
'
.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as
measured at
fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:
-
it has been incurred principally for the purpose of
repurchasing it in the near term, or
-
on initial recognition it is part of a portfolio of identified financial instruments that the
manages together and has a recent actual pattern of short-term profit taking, or
-
it is a derivative that is not
designated and effective hedging instrument.
Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or
loss
.
Other financial liabilities
Other financial liabilities, including borrowings
, t
rade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs
directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method
.
For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the
company’s
obligations are discharged, cancelled, or they expire.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 25 -
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of
inventories
or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Foreign exchange
Transactions in currencies other than
pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Adoption of new and revised standards and changes in accounting policies
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
2
Adoption of new and revised standards and changes in accounting policies
(Continued)
- 26 -
-
Amendments to References to the Conceptual Framework in IFRS Standards and /revised Conceptual Framework (effective 1 January 2020)
-
Definition of Material (Amendments to IAS 1 and IAS 8) (effective 1 January 2020)
-
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) (effective 1 January 2020)
The directors do not expect that the adoption of the other standards listed above will have a material impact of the company in future periods.
3
Revenue
2019
2018
$
$
Revenue analysed by class of business
Online gaming
235,157,076
252,880,945
2019
2018
$
$
Other significant revenue
Interest income
-
1,705,576
4
Operating profit
2019
2018
$
$
Operating profit for the year is stated after charging/(crediting):
Exchange (gains)/losses
(1,255,389)
1,383,145
Research and development costs
37,130,033
38,166,265
Fees payable to the company's auditor for the audit of the company's financial statements
25,000
25,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
UK Staff
10
1
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
5
Employees
(Continued)
- 27 -
Their aggregate remuneration comprised:
2019
2018
$
$
Wages and salaries
774,887
305,180
Social security costs
80,932
4,540
Pension costs
11,455
-
867,274
309,720
6
Investment income
2019
2018
$
$
Interest income
Bank deposits
-
1,705,576
Total interest income for financial assets that are not held at fair value through profit or loss is $- (2018 - $1,705,576).
7
Finance costs
2019
2018
$
$
Other interest payable
3,038,838
1,777,554
8
Income tax expense
2019
2018
$
$
Current tax
UK corporation tax on profits for the current period
15,977,059
18,376,299
Deferred tax
Origination and reversal of temporary differences
26,436
(335,662)
Total tax charge
16,003,495
18,040,637
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
8
Income tax expense
(Continued)
- 28 -
The charge for the year can be reconciled to the profit per the income statement as follows:
2019
2018
$
$
Profit before taxation
72,414,705
85,518,835
Expected tax charge based on a corporation tax rate of 19.00% (2018: 19.00%)
13,758,794
16,248,579
Effect of expenses not deductible in determining taxable profit
2,856,411
1,083,244
Effect of change in UK corporation tax rate
-
77,625
Other permanent differences
(704,218)
631,189
Deferred tax not recognised
92,508
-
Taxation charge for the year
16,003,495
18,040,637
9
Dividends
2019
2018
2019
2018
per share
per share
$
$
Amounts recognised as distributions to equity holders:
Ordinary
Interim dividend paid
-
119,772.00
-
63,000,000
The B share has no voting or dividend rights; nor does it count in a quorum at general meetings nor have any interest in any capital distribution.
10
Intangible assets
Development costs
$
Cost
Additions - purchased
1,895,407
At 31 December 2019
1,895,407
Carrying amount
At 31 December 2019
1,895,407
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
10
Intangible assets
(Continued)
- 29 -
During the year the company has incurred expenditure for a project to develop a game infrastructure, which will be universal gaming platform that will provide all the necessary infrastructure components for online social and casual games. Capitalized costs are payroll costs and payroll related costs (including benefits) for R&D team members, which are directly involved in software development. The project is in the early development stages and therefore no amortisation has been recognised as at the year ended. The company will start amortising the project in the following financial year.
11
Investments
Current
Non-current
2019
2018
2019
2018
$
$
$
$
Investments in subsidiaries
-
-
209,432,606
24,031,765
The company has not designated any financial assets that are not classified as held for trading as financial assets at fair value through profit or loss.
Fair value of financial assets carried at amortised cost
Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
On 16 January 2019, SASR Alpha Sechsundzwanzigste Beteiligungsverwaltung GmbH, the subsidiary of the company aquired 100% shareholding in Supertreat GmbH, a company registered in Austria. The acquisition term contains pricing adjustment based on the performance of the following one year after the purchase date. The company paid additional capital contribution of $147.5m into the subsidiary which was used to acquire the share capital of Supertreat GmbH.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 30 -
12
Subsidiaries
The company acquired the wholly owned subsidiary Wooga GmbH during the prior financial year. Ass at the year ended 31 December 2019, the subsidiary reported a loss of €127,234 and reported capital & reserves of €13,425,049.
During the year the SASR GmbH, the subsidiary of the company acquired the entire share capital of Supertreat GmbH for a cosideration of $147.6m. As at the year ended 31 December 2019, Supertreat GmbH reported a profit of €11,604,696 and reported capital & reserves of €12,639,696.
As at the year ended 31 December 2019 the subsidiary, SASR, Alpha Sechsundzwanzigste Beteiligungns GmbH reported a loss of €8,613 and reported capital & reserves of €132,818,908.
Details of the company's subsidiaries at 31 December 2019 are as follows:
Name of undertaking
Registered office
% Held
Direct
Voting
SASR GmbH
Austria
100.00
100.00
Wooga GmbH
Germany
100.00
100.00
13
Trade and other receivables
2019
2018
$
$
Trade receivables
19,769,175
22,607,697
VAT recoverable
853,972
849,305
Amounts owed by fellow group undertakings
779,630
172,119
Other receivables
85,256
130,289
Prepayments
348,443
541,186
21,836,476
24,300,596
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 31 -
14
Trade receivables - credit risk
Fair value of trade receivables
The directors consider that the carrying amount of trade and other receivables differs from fair value as follows:
Carrying value
Fair value
2019
2018
2019
2018
$
$
$
$
Trade receivables net of allowances
19,769,175
22,607,697
19,769,175
22,607,697
Other debtors
85,256
130,289
85,256
130,289
Prepayments
348,443
541,186
348,443
541,186
20,202,874
23,279,172
20,202,874
23,279,172
No significant receivable balances are impaired at the reporting end date.
15
Fair value of financial liabilities
The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 32 -
16
Liquidity risk
The following table details the remaining contractual maturity for the company's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the company may be required to pay.
Less than 1 month
3 months to 1 year
1 – 5 years
Total
$
$
$
$
At 31 December 2018
Trade payables
74,535
-
-
74,535
Amounts owed to fellow group copanies
-
50,803,053
-
50,803,053
Amount owed to related parties
-
85,376,300
-
85,376,300
Accruals
-
14,926,608
2,623,569
17,550,177
Social security and other taxation
22,856
-
-
22,856
Other payables
1,636
-
-
1,636
99,027
151,105,961
2,623,569
153,828,557
At 31 December 2019
Trade payables
2,911,671
-
-
2,911,671
Amounts owed to fellow group copanies
-
41,078,793
-
41,078,793
Accruals
-
18,855,513
6,871,874
25,727,387
Social security and other taxation
320
-
-
320
Other payables
44,518
-
-
44,518
2,956,509
59,934,306
6,871,874
69,762,689
17
Trade and other payables
Current
Non-current
2019
2018
2019
2018
$
$
$
$
Trade payables
2,911,671
74,535
-
-
Amounts owed to fellow group undertakings
41,078,793
50,803,053
-
-
Amounts owed to related parties
-
85,376,300
-
-
Accruals
18,855,513
14,926,608
6,871,874
2,623,569
Social security and other taxation
320
22,856
-
-
Other payables
902,598
1,636
-
-
63,748,895
151,204,988
6,871,874
2,623,569
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 33 -
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Timing differences
$
Deferred tax asset at 1 January 2018
(324,154)
Deferred tax movements in prior year
Credit to profit or loss
(335,662)
Deferred tax asset at 1 January 2019
(659,816)
Deferred tax movements in current year
Credit to profit or loss
26,437
Deferred tax asset at 31 December 2019
(633,379)
Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.
19
Pending litigation
In April 2018, Sean Wilson, a resident of Washington state, filed a complaint in the United States District Court, Western District of Washington, against Playtika Ltd and Caesars Interactive Entertainment, LLC. The Plaintiff demanded the defendants stop running the illegal gambling games, compensate his losses and damages, refund gains from the involved games and apply to the court to approve this case as a class suit.
On June 1
1
, 2020, the parties filed a stipulated motion seeking a stay of all proceedings and notifying the court that they had reached a binding agreement in principle to resolve all of Plaintiff’s claims. The agreement involves certification of a settlement class of Washington state purchasers, establishment of a USD
38
,
0
00
,000
non-reversionary settlement fund and certain non-monetary prospective measures. The parties executed a definitive settlement agreement, which is now subject to court approval.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 34 -
20
Retirement benefit schemes
Defined contribution schemes
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The total costs charged to income in respect of defined contribution plans is $11,455 (2018 - $-).
21
Share capital
2019
2018
$
$
Ordinary share capital
Issued and fully paid
32,463 Ordinary of 1p each
526
526
1 B Ordinary of $1 each
2
2
528
528
The B share has no voting or dividend rights; nor does it count in a quorum at general meetings nor have any interest in any capital distribution.
During the year the company issued one ordinary share of 1p for a premium at $36,390,000.
22
Share premium account
2019
2018
$
$
At the beginning of the year
5,712,866
5,712,866
Issue of new shares
36,390,000
-
At the end of the year
42,102,866
5,712,866
23
Capital risk management
The company is not subject to any externally imposed capital requirements.
24
Controlling party
The immediate parent company was Playtika Holding Corporation, a company registered in Delaware.
The ultimate parent company was Alpha Frontier Limited, a company registered in Cayman Island.
PLAYTIKA UK - HOUSE OF FUN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 35 -
25
Cash (absorbed by)/generated from operations
2019
2018
$
$
Profit for the year after tax
56,411,210
67,478,198
Adjustments for:
Taxation charged
16,003,495
18,040,637
Finance costs
3,038,838
1,777,554
Investment income
-
(1,705,576)
Movements in working capital:
Decrease/(increase) in trade and other receivables
2,464,120
(2,995,032)
(Decrease)/increase in trade and other payables
(83,207,788)
113,835,352
Cash (absorbed by)/generated from operations
(5,290,125)
196,431,133
2019-12-31
2019-01-01
false
CCH Software
CCH Accounts Production 2020.200
Tian Lin
Ron Korczak
Craig Abrahams
07728726
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2019-12-31
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2019-12-31
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2019-01-01
2019-12-31
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2019-12-31
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2019-12-31
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2018-12-31
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2019-12-31
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2019-12-31
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2018-12-31
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2019-12-31
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2019-12-31
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2019-12-31
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2019-12-31
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2018-12-31
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2018-12-31
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2019-12-31
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2019-12-31
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2019-12-31
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2019-12-31
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2019-12-31
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2019-12-31
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2019-01-01
2019-12-31
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2019-01-01
2019-12-31
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2019-12-31
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2019-12-31
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