The directors present the strategic report for the year ended 31 December 2021.
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 650 thousand people every day in 166 countries on 5 platforms. The company made a profit after taxation of $122,535,203 (2020: $54,815,355). Dividends of $nil (2020: $nil) were paid. The company's net assets at 31 December 2021 were $505,711,462 (2020: $223,176,259).
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 2021 are noted in the table below:
Q1 20 21 Q2 20 21 Q3 20 21 Q4 20 21
Average DAUs 483,120 457,811 443,868 408,330
Average MAUs 1,798,465 1,869,600 1,973,717 1 , 729,533
Average MUPs 21,458 2 0 , 554 19 , 115 18 ,4 42
Net ARPU 1 . 16 1 . 17 1 . 15 1 . 11
Net ARPPU 2 6 . 20 2 6 . 01 2 6 . 76 2 4 . 96
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.
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.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2021.
The results for the year are set out on page 10.
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.
The company markets a diverse product base across the industry sector and operates in varied market sectors and from a number of operational bases.
The Covid-19 outbreak has further developed during 2021 and into 2022, resulting in wide spread infection throughout the globe. Measures taken by various governments to contain the virus have affected global economic activity.
The increasingly digital, recurring and cash-generative nature of our operations remains one of our fundamental strength. With a strong balance sheet, low capital intensity and a track record of disciplined capital allocation, we have substantial flexibility as we navigate through an uncertain environment. However, we will continue to monitor developments for potential risks to the business and follow the guidance of national policies and advice.
Due to the exceptional circumstances arising from the Russia-Ukraine conflict, that began on 24 February 2022 and at the date of preparation of these annual accounts, the company does not anticipate any type of involvement, in terms of operations and liquidity, arising from the situation. The company has experienced a slight decline in European revenue in 2022 as a result of wider macro-economic factors, which includes but not limited to the impact of the conflict. The company has a significant research and development centre in Ukraine and at this time, the company is unable to estimate any specific impact to its business, financial condition or results of operation. The directors will continue to monitor this situation.
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.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
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.
The company has invested $47.9m (2020: $37m) 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 $5.4m (2020: $3m) 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
The auditor, UHY Hacker Young, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
We have audited the financial statements of Playtika UK - House of Fun Limited (the 'company') for the year ended 31 December 2021 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 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 United Kingdom.
Basis for opinion
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
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
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.
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.
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 .
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below .
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to company laws, tax compliance legislation, workplace regulations, employment related laws, rules adopted by the payment card networks, Data Protection Act and the General Data Protection Regulation 2016/679, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial results and potential management bias in the selection and application of significant accounting judgements and estimates. Audit procedures performed by the engagement team included:
Evaluation of design effectiveness of management’s controls to prevent and detect irregularities.
Enquiry with management and internal legal counsel about known or suspected instances of non-compliance with laws and regulations and fraud.
Review of legal expense account code to assess if there are any undisclosed litigation and claim.
Identifying and testing the validity of journal entries, in particular any journal entries posted with unusual account combination.
Reviewing minutes of meetings of management and the board of directors.
There are inherent limitations in the audit procedures described above; any instance of non-compliance with laws and regulations and fraud which is far removed from transactions reflected in the financial statements would diminish the likelihood of detection. Furthermore, the risk of not detecting a material misstatement due to fraud is greater than the risk of not detecting one resulting from error. Fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentation, or through an act of collusion that would mitigate internal controls.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our 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.
The income statement has been prepared on the basis that all operations are continuing operations.
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.
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 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.
The company 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.
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.
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.
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.
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.
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.
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.
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.
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 ' .
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.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
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.
The tax expense represents the sum of the tax currently payable and deferred tax.
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 UK):
Amendments to References to the Conceptual Framework - Amendments to IFRS 3 Business Combinations (effective 1 January 2022)
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) (effective 1 January 2023)
IFRS 9 Financial Instruments - Fees in the 10 percent test for derecognition of financial liabilities (effective 1 January 2022)
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.
In the opinion of the directors, the determination that it is not necessary to recognise a provision for expected credit losses in relation to the company's receivables from related parties is a critical judgement in terms of the requirements of IAS 1 Presentation of Financial Statements. These receivables are interest-free and repayable on demand. At 31 December 2021 the debtor companies did have sufficient cash and liquid assets available to repay these balances if demanded. The directors have considered cash-flow forecasts and concluded that all reasonable recovery scenarios indicate that the full amount of these loans would be recovered. Accordingly, no impairment loss has been recognised.
In the opinion of the directors, there are no sources of estimation uncertainty relating to amounts recognised in the financial statements that warrant their description as key in terms of requirements of IAS 1.
The company measures its financial assets measured at fair value through profit or loss or other comprehensive income at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the pr esumption that the orderly transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the company at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy based on the lowest level input that is s ignificant to the fair value measurement as a whole:
Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly;
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are measured at fair value in the financial statements on a re curring basis, the company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at each balance sheet date.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The charge for the year can be reconciled to the profit per the income statement as follows:
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 company amortises the project over three years in accordance with its accounting policies.
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.
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 August 31, 2021, Playtika UK – House of Fun Limited (“Buyer”) entered into a Share Sale and Purchase Agreement (“SPA”) with the shareholders and option holders (collectively, the “Sellers”) of Reworks pursuant to which the Buyer (i) acquired 80% of all issued and registered shares and options (“Share Capital”) of Reworks in exchange for cash consideration of $400 million, subject to customary closing adjustments, and (ii) would acquire the remaining 20% of the Share Capital (“Remainder Shares and Options”) for additional cash consideration (“Earnout Payment”) in an amount to be determined based on certain performance metrics during the calendar year 2022. The selling shareholders of Reworks include both third-party investors and certain historical employees of Reworks that will continue as employees of Playtika post-acquisition. As the SPA includes certain forfeiture provisions for selling employee shareholders, the earnout obligation payable to these employees will be recorded as compensation expense over the period that such payment is earned. On August 1, 2022, in connection with a contractual dispute between Buyer and the Sellers under the SPA, Buyer and the Sellers entered into an Omnibus Agreement, pursuant to which, among other things, Buyer acquired title to the Remainder Shares and Options in exchange for a $45 million cash payment to the Sellers (in lieu of the Earnout Payment). The earnout obligation payable to third-party sellers was USD 26,897,300.
During the year, the company provided a loan facility to its subsidiary, Playtika Poland. The loan maturity date is 30 November 2026 and interest is charged at 4.86% for this loan.
The company holds the entire share capital of the subsidiary Wooga ParentCo.DE GmbH, a company incorporated in Germany. As at the year ended 31 December 2021, the subsidiary reported a profit of €33,321,488 and reported capital & reserves of €25,010,034.
The company holds the entire share capital of Playtika ST Holding GmbH ( formerly SASR Alpha Sechsundzwanzigste Beteiligungs GmbH ), a company incorporated in Austria. As at the year ended 31 December 2021 the subsidiary, reported a profit of €37,652,675 and reported capital & reserves of €123,702,821.
On 2 January 2021, SASR Alpha Sechsundzwanzigste Beteiligungns GmbH was renamed to Playtika ST Holding GmbH.
Playtika ST Holding GmbH, the subsidiary of the company acquired the entire share capital of Supertreat GmbH, a company incorporated in Austria. As at the year ended 31 December 2021, Supertreat GmbH reported a profit of €41,171,649 and reported capital & reserves of €41,206,649.
On 31 August 2021 the company acquired the entire share capital of Reworks OY, a company incorporated in Finland with the agreement that the transaction consideration of the equity interest is a fixed amount of US$400m.
As at the year ended 31 December 2021, Reworks OY reported a profit of €1,758,234 and reported capital and reserves of €9,092,334.
Details of the company's subsidiaries at 31 December 2021 are as follows:
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
The directors consider that the carrying amount of trade and other receivables differs from fair value as follows:
No significant receivable balances are impaired at the reporting end date.
The loan from the parent entity was repayable on 7th anniversary of 31 August 2021 and interest accrues at 4.75% per annum. The entire loan was repaid after the balance sheet date in October 2022.
The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
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.
On 31 August 2 021, the company acquired 80% of the issued and registered shares and options of Reworks OY, a company incorporated in Finland , with the agreement that the transaction consideration for 80% of the equity interest is a fixed amount of USD 400,000,000, paid in 2021, and the transaction consideration for the remaining 20% of the equity interest is a variable consideration including a variable amount based on the profitability of Reworks OY in the financial year 2022, and was repaid in October 2022 . At the date of purchase, the fair value of such variable consideration was USD 33.7 million based on a pro forma estimate of future performance. As of 31 December 2021, the fair value of such v ariable consideration was USD 2 6 , 897 , 3 0 0.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.
On 31 D ecember 2020, a freelance writer who had provided game plot writing services for Wooga GmbH filed a lawsuit against Wooga GmbH, asking it to pay additional remuneration and stop reusing the written plot in the games under Wooga GmbH. As of the approval date of the financial statements, the lawsuit is still in the hearing stage. The court preliminarily estimated that the amount of dispute is EUR 1,546,000. As the obligation formed by the pending litigation is a present obligation, provision was recognised in the subsidiary' s financial statements as at 31 December 2021.
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 US$160,000.