Mor Weizer - CEO Ron Hoffman - CFO

Vaughan Lewis - Morgan Stanley Simon Davies - Canaccord James Wheatcroft - Citi Richard Carter - Deutsche Bank Gavin Kelleher - Goodbody Capital Markets Tal Grant - UBS Rich Stuber - Nomura Ed Birkin - Credit Suisse Alistair Ross - Investec

Welcome to the PlayTech's Q1 IMS conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Mor Weizer. Please go ahead.

Thank you, operator. Good morning everybody and thank you for taking the time to join us on this call to review PlayTech's Q1 2015 performance. I'm Mor Weizer, Chief Executive Officer of PlayTech. And with me is Ron Hoffman, our Chief Financial Officer. I'll now hand over to Ron to take you through some of the financials for the first quarter.

Thank you, Mor, and good morning everyone. I'm delighted to say that this is once again the best quarter that PlayTech has ever delivered, and it is the 15th quarter in a row that we have achieved double-digit revenue growth. Total revenue was €135 million, up 31% against the first quarter in 2014 on a reported basis. When excluding acquisitions, Q1 growth over the comparable quarter was 29%, which was augmented by the weakening of the euro at the start of 2015. When adjusting for these effects, underlying revenues, both on a constant currency basis and excluding acquisitions, were up 16%. These figures do not adjust for the impact of the POC tax in the UK. Adjusting for the POC tax impact, the 16% constant currency growth excluding acquisitions increases to 19%, reflecting the strength of the underlying growth of the business over the comparable period. Mobile revenues accounted for 18% of total software revenues, up from 14% a year ago, validating our belief in our mobile strategy and, as presented during our 2014 annual presentation, delivered incremental growth. Regulated revenue accounted for 40% of total revenues, up from 34% in Q1 last year, with regulated revenues within Europe being the majority of total European revenues. You may have noticed that we have taken out the regional split of our revenues from the announcements, but instead have provided the actual regulated proportion in the quarter and its growth on the comparable period. We have done that as we believe this is a better and more relevant indication and presentation of the quality of our top line which is increasing as we continue to focus on further business wins in regulated markets across Europe and elsewhere, in line with our stated strategy. In the interest of transparency, revenues from Europe represented 54% of total revenues in the quarter, Asia represented 38%, and 8% being all other regions. It is important to emphasize that while we see growth on both regulated and .com activities, regulated revenue streams continue to grow faster as more and more jurisdictions become regulated and as .com activity in Europe gradually transition into regulated revenue streams. This Q1 2015 performance also compares favorably to Q4 2014, with 7% growth both on a reported basis and excluding acquisitions, which had a negligible impact in the quarter. When looking at growth excluding both acquisitions and on a constant currency basis, Q1 2015 revenues grew by 1% over the previous quarter or 2% when adjusting for the impact of the UK POC tax. It is worth noting that the first quarter in 2015 has two fewer trading days compared to Q4 2014, and so daily average revenues are a more appropriate measure of performance. Daily average revenues in Q1 2015 at constant currency and excluding acquisitions were up 3% or over 4% if we adjust for the impact of the UK POC tax. Turning now to look at the product verticals in more detail. Casino, our largest vertical, grew by 28% on a reported basis against the same quarter in 2014, with good growth across all regions and with increased regulated revenues. This was driven by the combination of both organic growth and new business, and specifically growth in core casino activity, premium content PlayTech open platform, and with significant growth from mobile casino which has doubled against the same period in 2014 and now represents almost 13% of total casino activity. Derivatives grew by 27% on a reported basis against the same quarter in 2014, driven by both new business wins, including the newly signed structured agreements, enjoying better penetration of its customer base and positively impacted by the addition of the newly-established white label offerings. Land-based revenue tripled on a reported basis against the same quarter in 2014, impacted by acquisitions, which included Aristocrat Lotteries acquired in September 2014, and was also complemented by growth in the core Videobet activity and IGS. Sports grew by 31% on a reported basis against the same quarter in 2014, driven by continued growth in mobile activity, in particular in the UK with Ladbrokes, Gala Coral and Paddy Power. This product vertical continues to represent significant potential growth for the Group as further business wins are achieved, in line with the Group strategy and continued focus. Bingo grew by 27% on a reported basis against the same quarter in 2014, with growth broadly equally split between existing and new business. Mobile penetration in bingo continues to grow as expected, although still in its infancy. And important to note that bingo side games, which are recorded under the casino line item, increased in line with the growth in core bingo activity, also driven by the mobile offerings. As expected, poker remains a challenging vertical with revenue down 17% against the same quarter last year, although already from a very low base, which represents an immaterial impact to the overall revenue performance of the Group. Cash and cash equivalents at the end of the quarter were €700 million, following the acquisition of Yoyo and prior to the initial payments of €208 million related to the TradeFX transaction which will be paid on completion expected by the end of next month. Looking at current trading, the strong Q1 performance has continued into Q2, with daily average revenues over the first 25 days of April up over 25% compared to Q2 2014, reflecting an increase of over 10% on a constant currency basis. Finally from me, TradeFX continues to perform as expected. Key performance indicators continue the trends shown in the first quarter as the business continues to deliver on its strategy following the deployment of its proprietary technology, strong focus on mobile, and further developing its B2B position. As indicated when we announced the acquisition, we would expect completion by May 31. I'll now hand back to Mor.

Many thanks, Ron. Before taking your questions, I would like to look at some of the operational factors that have contributed to another record quarter. Our strategy is founded upon signing new licensees and providing more products and services to existing licensee. Upon continuing to out-innovate the competition and investing to extend our market leadership, and upon making strategic acquisitions to supplement organic growth, we've made great progress in executing against our strategy so far in 2015. Looking first at our licensees, I was delighted to announce the signing a few weeks ago of LeoVegas, the innovative mobile casino brand, on the PlayTech open platform or POP for short. LeoVegas is set to launch a host of PlayTech-designed games in the coming weeks, while several other significant UK and international operators are in the latter stages of finalizing similar agreements. In February we announced that RAY, Finland's national gaming operator, had signed a 20-year online contract extension, the longest deal in both companies' histories. The extension followed four years of highly successful years with PlayTech, generating year-on-year double-digit growth. The 20-year agreement includes omni-channel gaming software, content and support across online, mobile and retail, with an automatic renewal period of four years, and underlines PlayTech's commitment to regulated markets. We are also announcing the benefits of the new licensee initiatives from last year coming to fruition, including Ladbrokes, Sky Casino, Live Casino, Caliente, Trinity Mirror and Gazzetta dello Sport, amongst others, as well as extending our mobile sports application now being extended to desktops, simplifying and improving player experience. We also made significant progress establishing ourselves across new regulated and soon to be regulated territories. The impact of the benefits of such contracts, together with an exciting pipeline, gives us confidence in multiple growth engines of growth. Looking now at our products, PlayTech continues to invest heavily in R&D to extend its lead over its competitors. Last week we announced that in the last 18 months we focused on omni-channel development, with a bigger portion of our employee base now focused on this area as a direct result of our success and invest in PlayTech ONE, the gaming industry's leading unique omni-channel technology offering. PlayTech is currently concentrating its resources on several significant, soon-to-be-announced global government and non-government omni-channel contracts. This has meant that a large number of developers, operational products, IT and customer support staff specialists are required to ensure the successful delivery. Sports betting will see the cornerstone investment as part of the PlayTech ONE strategic roadmap and is PlayTech's fastest-growing product vertical. Ahead of a number of these that will be announced in due course later this year and in order to strengthen support for existing sports-driven contracts, PlayTech Sports has been reorganized with all omni-channel sports capabilities and technology efforts merged into one. This gives customers one complete sports betting and gaming technology offering, with full customer visibility across one system, all channel and all devices, and an improved customer journey across the offering. The first quarter also saw the launch of Rainbow Riches Bingo, the first-ever bingo variant of the iconic cross-channel brands, as well as unveiling a series of never-before-seen industry-first features within an extended virtual sports portfolio, including a new, fully simulated football games, allowing for realistic betting and game play. Lastly, on product, on Friday we launched an app for the Apple Watch which was only launched that day. The app, which was developed in four weeks and received approval from Apple App Store, will allow users to place bets directly from their wrists and will link directly with the customer's main iOS app. Finally, 2015 has seen us make two important acquisitions. Firstly, in February, we announced the bolt-on acquisition of Yoyo Games, the home of GameMaker Studio, a mobile-driven cross-platform casual game development technology that enables developers to create games using a single programming code and then published them to run natively across most common platforms. The entire GameMaker family of products has been used by more than 750,000 developers and downloaded more than 5m times. Secondly, just after the quarter-end, we announced the acquisition of TradeFX, which has now received shareholder approval. I'm also delighted to announce that PlayTech has now also obtained an FCA license under which the business will operate. Subject to regulatory approval, the acquisition is expected to complete at the end of May this year. The acquisition of TradeFX increases our diversity both in terms of verticals and geographies, and improves our quality of earnings, as well as presenting the Company with numerous growth opportunities both organic and through acquisitions. Progress is already being made identifying numerous acquisition targets, and both companies' teams discuss the integration of TradeFX into the Group to ensure we leverage the enlarged Group capabilities. Looking forward, the strong start we have made to the year, together with the progress we continue to make in all aspects of the business, both on an organic and inorganic basis, gives me growth confidence in Playtech's ability to deliver strong growth in 2015 and beyond. With that, we would be pleased now to take any questions, and so I'll hand over to the operator.

[Operator Instructions]. We will now take our first question from Vaughan Lewis of Morgan Stanley. Please go ahead.

Just following on from your last comments there, Mor. Are you still looking at further acquisitions outside TradeFX or is that the main target for deals there? In terms of core business, looking at revenue growth, how much of the revenue growth has come from the new white label type contracts? And do these contracts generate a positive EBITDA contribution at the moment or is it a sort of ramp-up phase over the next few years? And then finally, on contract renewals. With all the new mobile and BIT technology you've got coming through, have you been able to increase the fee at all on any of the contract renewals or should we still assume some pressure on fees? Thanks.

So I'll answer the first and third questions. Ron will refer to the second. On the target, we are very much focused, as you know, on the TradeFX acquisition. We are happy that we received the shareholders' approvals, and we remain very much focus on that. Having said that, we remain very acquisitive and very active both in the online CFD market as well as gaming. And we definitely pursue additional acquisitions in both spaces. So it's not - I was not just referring to TradeFX, definitely goes beyond that. And also alongside that, as I said, we look at other - still other gaming opportunities that we consider. On the contract renewal, it's not about - actually most of the contract was renewed last year. There are a few that are - that will be renewed between now and the end of next year. And given discussions with the - with those that we believe we will - confident we will renew the contracts with, I don't foresee us increasing the fees but maintaining them instead. So I don't think that there will be much change to the existing contracts and the level of fees we charge.

Okay. On the question on the revenue growth coming from the white label offering. I would say around €5 million in this quarter were attributed to revenues coming from the white label offering. Now this comes with a positive EBITDA number, meaning it is complementary to our business and it's not a breakeven business. But obviously from - with a higher - with a lower margin to the regular, I would say, software business, simply because of the nature of this. I mean it's a white label offering and therefore we record the full top line as if we are the operator even though we are not. The only thing I would add to that is the fact that we believe this area will continue to grow, not just organically, also from both additional licensees, additional customers we're already in discussions with PlayTech today. And we see that as an opportunity to continue to grow that front. As it grows, we believe that the margin will be better, but not yet at the level of PlayTech, but I would leave discussions on EBITDA performance to semi-annual and annual performances.

We will now take our question from Simon Davies with Canaccord. Please go ahead.

Just following on from the comments on margin on white label, but can you quantify that a bit more? Is this a single-digit margin? And do you think there's still for that to expand as you build scale?

The answer is no. It's a double-digit number. And that's exactly my point in the last part. I mean it will be higher than what it is now given greater scale. But again, I mean this discussion right now is more, I mean, this IMS is more about the top line and not really about the EBITDA line item. So we'll leave that for another day, I believe.

Yes. Secondly, 40% of revenues from regulated markets. Can you give us a feel for the pro forma percentage if you incorporated TradeFX into that number?

If we had TradeFX to the mix, actually I would say the following. If we look at - I'll talk about the 2014 TradeFX number because this is basically the number that we are - that we have on a fully annual basis. We see this business with basically 100% - being a fully regulated business. I mean there is a difference between how gaming operators have been perceived with respect to regulated/non-regulated split and how the CFD and ForEx businesses are being viewed. We see this business as being fully regulated. Any customer from the jurisdictions that TradeFX are operating in are going through the same process with [indiscernible] and in the future together with the FDA as well, the same KYC processes, fully regulated. They're going through the quarterly audits and surprise audits by the regulators. So we see that as a fully regulated business altogether. And therefore that will increase our, I would say, on an annualized basis, it will increase our regulated proportion to 50%. In addition to that, I would comment that, if we look on a locally regulated basis, and meaning jurisdictions where there are local regulations, specific local regulations, like [indiscernible] or FDA for the Europe - for Europe and South Africa and Australia and the likes of these types of jurisdictions, and in the future as well as Russia and others, this is right now - in 2014 it was 63% for TradeFX, and therefore if we combine the locally regulated proportion and add the fully regulated revenues from PlayTech, it would be around 44%, 45% - I believe 44%. But it will be the combination of these two, meaning we will - both will present the fully regulated aspects, which will be north of 50%, and then the locally regulated percentage which would be around 44%.

And lastly, TradeFX has an option to make a bolt-on acquisition. Having had a bit more time to do due diligence, do you expect that acquisition or that option to be exercised? And what kind of value would that acquisition be?

Yes. The main message that we sent at the time of the TradeFX acquisition remains the same. So far, so good. We are still very excited about the opportunity. We still pursue this opportunity, and there is nothing that came across during the due diligence that lead us thinking otherwise.

When do you think that acquisition might happen?

We expect it to happen in the - at the end of the second quarter, beginning of the third.

We will now take our next question from James Wheatcroft of Citi. Please go ahead.

I just want a little bit more color on last week's press release about employee recruitment. I'm interested in the timing relative to contract wins and the extent of any profit drag. And then secondly, just could you talk about the pipeline of potential contracts please?

Sorry, again, can you repeat the first one again? In - you're referring to the announcement that we made on the investment into omni-channel?

Yes. And I'm just interested if you're talking about employing 300 more staff, and I'm just interested in the sort of timing of the costs related with that relative to the revenues you might generate from those contract wins you talked about in the release.

Understood. So I would say the following. We don't see that as anything which is changing our financial performance going forward, meaning it's not going to change the consensus or the guidance that we give to the markets. It's pretty much we see that as embedded as part of the growth of the business altogether from both the costs and the revenue side. It's simply highlighting the fact that this is the future. This is where we invest in on the combination of both the retail, online, web and mobile. And therefore we invest heavily into that. And we see that as an offering which is relevant to many of the top customers that we have today. We've seen that with RAY as well, and this is definitely the future for us. And the potential for us is very significant. As we've seen in the past and in any other investment that PlayTech did, you initially do the investment and then you start generating the revenues from that, on the back of that. We don't see that as anything that you should change your margin models going forward. I think this is pretty much embedded as part of the cost growth of the business to deliver revenue growth as well.

And then just the pipeline of future contracts, can you give a little bit more color? You talked in that same release about significant government and non-government contracts pending.

Yes, we can't really comment on that specifically, but definitely there are some exciting opportunities for us that are in, I would say, advanced discussions. And therefore we are quite excited. I referred to that in the analyst presentation around the TradeFX acquisition, I was asked about that. And we definitely feel very comfortable and very confident about the very strong pipeline that we have that accelerated since the beginning of the year. A lot of those are omni-channel opportunities, the PlayTech ONE concept that we introduced. The investments made so far gives us - obviously just reiterates and displays our confidence in the future growth of the company. We have gone through a process as part of which we reorganize internally, so, some people left or some people - and some others move between divisions internally. So, just to reiterate the fact, there are no - there are not going to be an impact on margin even though we recruited more employees and shifted some internally. And this is ahead of this quite exciting news that we expect later this year. I can't really quantify without maybe just saying, I can't really quantify or refer specifically. It's obviously very focused only in regulated markets, and these are quite exciting opportunities for PlayTech across various - across all verticals, and definitely some of those include the services as well.

We will now take our next question from Richard Carter of Deutsche Bank. Please go ahead.

Couple of questions please. Firstly, I think you're sort of guiding to €600 million of revenue for the year. If you strip out the TradeFX deal, that sort of implies 9% underlying growth. So, is there anything I'm missing or do you expect to lose contracts or something in the second half for the underlying growth rate to be that lower or you're just being your usual conservative? And then secondly, can you just help us understand a little bit on the cost side, I know the euro's obviously weakening against a lot of the currencies, so, how much of your costs are actually in sterling please?

So I would start with, obviously, on the revenue side. You know that we don't give guidance really to the market with respect to the top line. Actually what we said is - no, what we said is that the number will start with a six, just to make sure that people are aligned with that number. It doesn't mean that it has to be six-zero-zero. It will start with a six. Six hundred, to be honest, I believe it is a conservative number, is a very conservative number. Obviously we're talking about including TradeFX. But again, I mean the projections of the business, I think the run rate of the business is reflecting the performance of TradeFX for 2015. I can't comment too much going forward. It's still early in the year. We're talking, we're still in April and there's still a long way to go. But we didn't really give guidance on just 600. This is a conservative number for us. On your other point, sterling on our cost side represents approximately 20%, 25% of the cost basis basically in these areas altogether.

So in terms of where we were a couple of months ago, the sterling cost is obviously going to be higher but your revenue is obviously higher as you translate them into euros.

Yes. From - our top line is basically - a third of our top line is in euros, so, everything else is growing. I mean it's positively affected by the weakening of the euro. So that 67% approximately of the revenues being complemented and augmented by the weakening of the euro. And on the other side, I mean most of our costs is still in euros or euro-related. Sterlings would be around 20%, 25%.

And is that mainly, those sterling costs, mainly employee costs?

Yes. Most of our costs will be employee costs.

Yes. Okay. And then just a couple more please. In terms of Asia, obviously it's up 51%, and it's 38% of the business. Is there a point just from a risk perspective whereby you start to get too much of the business given it's unregulated? And then also, could you just remind us how of diversified that 38% is geographically please, in Asia?

Yes. So with regards to Asia, I will say that, as we indicated before, our customers - some of our customers are active there, and these customers are long-term customers of PlayTech. So we feel very comfortable with the growth and with the fact that we believe that this situation, this is sustainable going forward. We can't really restrict our customers. They have been doing very, very well. Some of those customers are customers that focus on various Asian markets, but also in other markets, and they grow in both. I think that the main message here is, even though we grew, our regulated portion of the business grew even faster, going from 34% of the business last year, first quarter of last year, to 30% this year. This is mainly - this mainly happened, as we indicated in the final results presentation, this mainly happened in the second half of last year and the beginning of this year, and we see this accelerating and we see this trend improving over - I mean improving in numbers and portions are - improve regulated - the regulated proportion improving over time. So while we do expect some growth the regulated proportion improving over time. So while we do expect some growth in Asia, we do expect regulated markets to grow faster. In terms of the diversity, the main contribution is from, we indicated before, we did not and we can't provide the specific numbers, but we did indicate that the main jurisdiction across Asia is China. As we indicated before, China is very, very fragmented divided into different provinces, with different local governments and we definitely see, we see some changes and positive ones, in some provinces we see these changes happening across Asia, we definitely expect some regulated Asian revenue and income streams going forward, not necessarily just in China or in China, but across Asia, we work hard on that. We secured some and we put a lot of efforts into that and this is - this will obviously only support the regulated portion becoming even higher.

And just on the mobile 18%, just to clarify, is that 18% of the overall revenue? Is that sort of 18% of the sort of pre-services revenue?

This is 18% of software revenues, so it excludes services and our retail activity and anything which is unlike some other revenues as well, 18% of total software revenues.

Okay, and then just sorry, final question. On the Holland Casino, I think there was an expectation that would probably be rolled out in the second half of this year, could you just tell us where you think you stand on that and what the likely timing is it when Holland Casino could potentially be rolled out.

Holland Casino will be rolled out as soon as regulates would permit that. We are obviously relying on the regulations coming through. I believe that the conservations we held recently at the first quarter of 2016, nothing has changed in that respect. And as soon as it will be introduced, we will definitely launch Holland Casino.

We will now take our next question from Gavin Kelleher of Goodbody Capital Markets.

Could you just give some color on how the individual regulator markets have performed in Q1? Obviously UK will be up strongly because of sterling. Could you give us an underlying picture there and maybe how Italy is doing and then some other European regulator markets. And then secondly, just on your this capabilities, could you just give some - an update on how many people are using them at the moment and what the pipeline is like there?

We don't give out the split on a country-by-country basis, so I can't really give you the numbers, but I will say that obviously regulated markets increase significantly. UK would be, I would say would be the biggest contributor to that, simply because a lot of the new business that was introducing in late in 2014 including the migration of Ladbrokes for example and others and Sky Bet and others had significant contribution when comparing to the first quarter of 2014. So UK is the first one in - the first one at the top there. But I will say, it’s a combination of both new business and organic growth across pretty much every regulated market that we have presence in. So we see growth in all of these markets altogether, both organically and with new business. As for the second question on regulated markets specific opportunities, I would say that we do not restrict our search to any specific jurisdiction, obviously our regulated jurisdiction is to be commercially viable for the company and one that makes sense for us to invest the resources. We also evaluate the projects and the opportunities in accordance with a return on invested resources as we call it internally. I would say that we still see a lot of opportunities in the UK, we see opportunities in Italy, Spain, we see opportunities in certain regulated markets across Eastern Europe, Romania, the Czech Republic, Poland, Hungary, Portugal is going towards regulated - to be regulated, the Netherlands obviously, Latin America, we are very much focused on Mexico, but it goes beyond Mexico these days. And not least - last but not least, Asia, we see some real opportunities in Asia, definitely now that we established ourselves as - we intend to complete the trade effects acquisition by the end of this month. We see opportunities across Asia for this business and for gaming going forward.

I'm sorry, just on the Business Intelligence Technology's, could you give an update on how many people are using that at the moment and what the pipeline is like?

It's just a matter of delivery these days. All of our customers are very interested in that. Those that already launched that, including some of the largest bookies in the UK, are very happy with the results and they want to - those that have more than one brand, would like to hold it out to the other, and include the other brands as well. I would say that amongst the 15 top licensees, around half of those already launched the BIT tool, with the others scheduled to be launched in the coming quarters.

We will now take our next question from Tal Grant of UBS. Please go ahead.

Just wanted to ask you, because I think Ladbrokes was launched at the end of April last year, wasn’t it. So just trying to get an idea of how much, how sustainable the 25% growth rate is that you’ve seen so far this quarter. So could you give us a number, ex-Ladbrokes maybe for the first month. And secondly, just wondering if you could give us any KPIs or actual financial data for trade FX in the quarter to date, so either revenue growth, customers added, ARPU, averages acquisition cost something like that would be quite helpful. And finally just wondering on the - I think in that article, sort of the in the press release you issued last week, you talked about doing some [indiscernible] in sports, and so just trying to understand what you might buy ahead, is it technology or after, or could you buy a legacy supplier towards customers for example. Thanks.

On currency trading I would say the following. First of all it’s a little bit too early to talk about sustainability throughout the year or with respect to 2015. I think we're just at the beginning. It’s a fair comment to say that Ladbrokes was a very significant contributor which has migrated basically at the beginning of May we started to see the revenues, therefore I completely agree with that concept, but with that being said, we are highly confident about the consensus, we feel very confident about consensus which already embeds a significant growth. Not only the numbers are picking up from this specific customer, but also from other customers and other initiatives including BIT, including the [indiscernible] including many, many other customers which are continuing to drive growth and pretty much all new business that we've introduced. So it's not just condensed about these customers specifically. I can't right now strip out specifically Ladbrokes because of commercial sensitivity, I think that's fairly understandable, but we do believe that the consensus for this year is something that we - that is achievable and we will achieve but I think it's too early in the year. On trade FX, we can't give specific numbers right now, it's still not consolidated, but I will say the following, first of all the KPIs are continuing strongly as I've indicated at the beginning of the conversation. It’s basically continuing the same trends that we've seen in the first quarter meaning the first quarter already had 11,500 or so new FTBs, the trend continues to grow from that. Obviously now we're talking about less day so we're talking about on a per daily average, on a trading daily average, the numbers continue to pick up with a number of FTBs. ARPU hasn’t changed much. I think we are only talking about another 25 days since the quarterly results. So the ARPU altogether remains pretty much steady at the same level. I will say that April in its entirety has less trading days because of Easter, so by definition, the revenues for these period are fairly slower which is seasonality and traditionally it’s a quitter period, but definitely the indicators and all the KPIs are very positive and we are highly confident about the projections going forward.

[Indiscernible] sports and our recent references to sports, as I indicated earlier this morning, sports is the fastest growing vertical for PlayTech. Obviously it was the non-existent vertical for us couple of years ago, then we established our third room Mobenga, and then Geneity and now obviously following the execution of our strategy, it is the fastest growing element of our business. Remember that sports is the entry into - the gateway into gambling altogether, so most people will come through, or most customers will come through sports betting and then convert to gaming activities, will be converted to gaming activities, which led us to believe that the future lies with Omni channel. Specifically on sports acquisitions, there are three areas or so that we are very much focused on. Obviously the first person for most technology one or obviously technologies that will and will - that will support our Omni channel approach, combining retail online web in mobile. So definitely we see some opportunities there. We also see obviously there may be an added value and we are very much interested in gaining access into certain customers that some of these companies have. So I wouldn’t rule that out without hinting or without implying to a specific or without making any comment on any specific acquisition and another aspect of it is technology that is very advanced or very customized and localizing for certain markets because not all markets are identical. I think about the UK and the horse racing out there that is very different than you what you find with [indiscernible] and operate that all in some case don’t even offer that. If you think about certain other jurisdictions certain local sports activities are the dominance event. So I would say it's a combination of - from a technology perspective it's a combination of various aspects and we take all of those into consideration. Other elements apart from technology is sports feeds, feeds and content altogether become very, very important and we want to complement the technology that we provide with a lot of content that we believe we will be able to offer all supported by advancing trading algorithms that we believe that we will be able to gain access into by internal development as well as acquisition.

And just another question actually on trader facts, just wondering because you got the FCA license and sounds like your plan that was on [indiscernible] license going forward. Just wondering if there is any ramifications of that operational, so would you be required to hold more capital or otherwise that would affect the operations of the business?

Yes I think the plan is basically to use both to be honest depending on the jurisdiction and the activity but effectively we believe that we will use both. I don’t believe this comes with any difference operationally other than some back office areas nothing too dramatic other than that. From a cash capital requirement perspective I think it's pretty much in-line as the business will grow we obviously we will need to have more capital advocacy capital requirements from that perspective but it is nothing which puts us in any constraints it's very limited and aligns with the growth of the business altogether.

We will now take our question from Rich Stuber of Nomura. Please go ahead.

Just a couple of question please, the first one is with your sort of increase I regulated revenues up 6 percentage points, is there any material change in the custom concentration ratios I think in the last few years - the top five years' 53% funding [ph], has that changed? And the second question trade aspects give that you will have the detailed CFD option, have you - current licensees is there a lot of potential to take up of this new put out? Thank you.

With respect to the customer concentration, actually the diversity of the business has improved so the 53% last year is actually in Q1 52% now so it's slightly better given more customers basically on a regulated revenues, so that’s an improved area and we believe it's sustainable, we believe which will actually continue to drop but not too significantly at this point but definitely getting to in the right direction. On the second point on the trade effects potential host of opportunities we just started forming, we basically formed the plan and we are about to start executing against this plan. So we will be very active in the - from this point onwards and until the end of the year we believe that we will be able to introduce this with more licensees, I mean more companies that are currently our licensees. As we indicated before we already secured Ladbrokes and Caliente but we definitely believe that the others will be interested in that especially given the fact that our customers want to further diversify their businesses as well and therefore we believe that this will create a win-win situation for everyone. It's complimentary to the business mainly the binary options elements, complimentary to the business and now they can have a partner that can provide them with everything they need in order to grow to introduce a new vertical if they don’t have it yet and make it a growth element in the business.

And just a quick follow-up, do you know if your licensees would require an FD license or equivalent of CFDs to customers?

It all comes down to whether we want to operate which licensees those will be. In the UK as you know binary options are currently the gaming regulations and therefore you will financial betting offered to customers today of course large bookmakers here in the UK. Elsewhere of course Europe and outside of Europe they may need their FD license but obviously as part of a turnkey solution PlayTech will be able to provide them with everything necessary in order to operate binary options and not just in the UK but outside of the UK as well.

We will now take our next question from Ed Birkin of Credit Suisse. Please go ahead.

Just to get an idea of the performance of the FX on regulated markets. I was wondering if you could spit out what a regulated market growth would be if you did in constant currency? Secondly in terms of the UK, are you able to give some key data you have last from new contracts? I know you said you started getting revenues from Ladbrokes in May, perhaps you can tell us what date when you started seeing meaningful revenue in some of the [indiscernible] you launched toward the end of last year as well. And then finally if you can just give an update on the performance of the poker strategy in Q1, please.

Yes, so let me start with the first one. you were talking about growth in the regulated markets on a constant currency basis. So I would say basically I mean obviously regulated markets grew significantly. We’re talking about a 47% growth of the regulated markets altogether. I believe on a constant currency basis it would be I mean I didn’t do the math to be honest. I think I can come back to you specifically on that but I think it would be somewhere along the lines of 20 plus even potentially close to 30% growth but I will need to check that and get back to you. What was the second question sorry?

In terms of significant date of revenue coming online in the UK from - well I said new licensees the new revenue stream so I would like to see now something with Europe in license fees [ph]?

So as we indicated most of those that we announced our launch, other projects are underway, will be announced in due course, we believe that some of these announcements will be made in the next 2 - 3 quarters, so this year definitely. And given the fact that the projects are underway there will be in the second half some contribution from existing - sorry from new licensees both in the UK and as where. We’re not in a position to quantify those currently, and definitely concerning them but as soon as we name those we will indicate when they are about to launch and as I indicated earlier I would say that the launches will be soon after it will be announced.

Sorry in terms what has been already have been announced, so we have had in terms of comps for the year, the lap up you started getting in May. When - was it Q4 when you started getting a lot of the incremental live casino like Sky Bet?

The answer is yes. Most of the other initiatives other than Ladbrokes were launched towards the end of the third quarter beginning of the fourth. And in terms of your question on focus strategy, it's basically in-line with last year. It's slightly below - or we are talking about less than a million difference, obviously affected by the decline in the poker markets. so that’s basically where it is at the moment.

We will now take our next question from Vaughan Lewis of Morgan Stanley. Please go ahead.

When you talk about revenues for the year starting with a six, I presume that includes trade FX only from completion so the 6 or 7 months of that and it's not a pro forma figure, is that right?

Yes that’s right.

Okay. And then looking at the quarter the first eight weeks were up 22% in the quarter so over 30, so March was up 40% odd, what exactly happened in March to drive that big step change in growth?

Yes there were a few factors that has happened. One is the currency effect. I mean March, had even the euro even weakened further so that had a stronger effect altogether and the business continued to grow. March was a very strong month, it's usually right before Easter so it's usually it's a very strong period altogether but specifically March was very strong that’s basically--

Are some of the services revenues or somethings, the end of the quarter or is it just operating trends accelerated that much?

No there is nothing, there is no specific one-offs which are doing that or any timing element, it's mostly actual growth and Caliente continues to grow and obviously March was much better than January because it was pretty much sorted at the end of '14 but this is just the nature of the growth.

We will now take our next question from Richard Carter of Deutsche Bank. Please go ahead.

Just one follow-up question on the UK cost 25% that’s excluding trade effects isn't it?

Yes the answer is 22% indicated earlier of course is only PlayTech at this point. Most of the cost of trade effects are not linked to this earnings. It's mainly euros and jurisdictions, well it's dollar earnings [ph].

Okay. And then on the land base, is it possible just to give us a flavor in terms of what the machine growth rate is there please underlying?

It's not as significant and continues to grow. We’re talking about a few 100 machine so nothing too dramatic, the growth that you’ve seen the land based line item is a combination of acquisitions not just Aristocrat Lotteries. We also had Cyclone which is a content [ph] company providing games for the retail activity which also enjoyed some growth and an acquisition altogether which wasn’t there in the previous quarter in Q1, '14 and some other acquisitions, smaller type of acquisition in the area of retail and other acquisitions. This is driving most of the growth and IGS as well, the IGS management system which had a significant customer in the first quarter of 2015, generating an additional 1.5 million just from that line item so this was basically the balance between all the factors altogether.

So the 8.3 is a reasonable run-rate you’re assuming in this division going forward?

Other than the one-off 1.5 million one-off of IGS which maybe - it's dependent on specific sales activity of IGS which is positive don’t get me wrong, but it's specifically timing aspect. I think it is.

And you said that poker structure was about 1 million lower than year-on-year in terms of revenue?

Less than 1 million.

We will now take a question from Alistair Ross of Investec. Please go ahead.

Just a quick one from me, if I split out your absolute growth so the actual increase, the 33.6 million increase from Q1 '14 to Q1 '15 and I just split that out. I get Asia 16.8 which is 50% of the growth. I get Whitelabel which is 5 million which you mentioned on the call earlier, then I get acquisitions of approximately 2 million, currency impact I think is about 14 million. Can you give me a flavor for the rest of it so there is a decrease, can you just give me a flavor for the decrease?

I would say the following, I don’t think there is an overall decrease actually, if we look at constant currency of 16% so actually 19, but after POC tax so we’re talking about 16%. This is already excluding acquisitions, so you can strip that out and excluding currency effects and excluding the POC tax so basically the only other element that you’ve stripped out is the growth in Asia versus the other parts of the world and regulated definitely grew faster than that. So the only negative area of the business other than the very small effect of poker was the dot com in Europe which continues to decrease and as the transition to regulated becomes more significant. Other than that I think there is nothing - we don’t see any negative influences altogether.

Actually, Alistair, we don’t see this as a negative - we don’t see that as a negative trend. We see that as a natural [indiscernible] industry. What happens in euro is that on one hand you see a decline in activity in certain unregulated market, people shifting budgets from unregulated to regulated market. Regulated market accordingly grow fast and they grow faster than unregulated part of the business regardless of where they see is Europe, Asia or elsewhere. So in other words Asia grew, regulated market grew very fast. Some markets in Europe declined as part of the transition, overall together regulated grew faster and hence the increase in the business.

So can you just quantify the decrease due to pulling out of unregulated markets?

Not pulling out of unregulated markets--

Or shifting marketing spend?

In marketing spend do you mean by operator, so you’re asking us the question of how the operators that react to that? So again it's not us exiting certain markets. It's simply a natural decrease of the activity in dot com throughout Europe as a lot of more markets are transitioning into dot com. Netherlands would be a good example for that, as customers on this standard this will become a regulated business. There is not a lot of ROI coming from investing now into marketing into these markets etcetera, etcetera. And the list goes on.

And can you quantify that though, that effect that you talk about?

I think Europe dot com activity goes down approximately 10% on a nominal basis. But obviously we can take that offline if you wish to know further.

There is one final question in the queue from Ed Birkin of Credit Suisse.

Just final one, just current [indiscernible] spend constant currency growth ex-acquisition the white label obviously they cancelled this acquisition and is the white label revenue a 100% regulated?

Yes the white label is a 100% regulated, it doesn’t account as an acquisition, it accounts for just regular growth of the business.

There no further questions in the queue.

Thank you very much for your participation and have a great day.

Thank you all. Thank you.

Thank you. That concludes today's conference call. Thank you for your participation ladies and gentlemen and you may now disconnect.